The Future of Online Food Industry: Guide for Aspiring Entrepreneurs

Globally, the food delivery market accounts for €83 billion, which is 1 percent of the total food market and around 4 percent of food sold through restaurants and fast food outlets. The food industry has matured in most countries, with an overall annual growth rate estimated at 3.5 percent for the next five years.

By far, the most common form of delivery is the traditional model, in which the consumer places an order with the local restaurant over the phone and waits for the restaurant to bring the food to the door. This traditional category has a 90 percent market share, and most of those orders—almost three-quarters—are still placed by phone.

However, as in so many other sectors, the rise of digital technology is reshaping the market. Consumers are getting accustomed to shopping online through apps and websites which offer maximum convenience and transparency. The same can be said when it comes to ordering dinner. Now people prefer to order goods on the run as it’s not feasible to order on the desktop whereas, people are ordering what they want with a few taps on the phone.

In early 2013, new players emerged in the food delivery sector. In this sector, users order meal through ‘food delivery app’ from the desired restaurant. Customers can order food from both food ordering or food delivery application but the major difference is, rather than going on the website’s app of a particular restaurant, the user gets all the restaurant listed in food delivery app. Some example of such apps is UberEats, Zomato, FoodPanda, etc.

In this blog, we are not just preaching that entrepreneurs should invest in an online food delivery marketplace. We are providing facts and figures which will show the huge demand and opportunities for entrepreneurs in the online food delivery sector.

Growth of Online Food Industry

When every offline business is stepping in the online world, the food-delivery market is in the middle of a huge channel migration. Every business is now creating its own mobile app to become a part of the ever-growing online business.

According to BI Intelligence:

“Orders placed via smartphone are expected to account for more than 10% of all quick-service restaurant sales by 2020, at which point mobile ordering is expected to be a $38 billion industry’’

Mobile apps are surely playing and are going to play a vital role in any online business. Investing in a mobile application can be the best move in the coming future.

The Past and Future Market Scenario

In the year 2015, there was a huge debate on whether hyper local businesses will be able to shift to online businesses. One sector which grabbed maximum attention was the food industry. The reasons were that it is expected to see revenue of $78 billion by 2018, which will subsequently grow 16 percent. This sector has always shown high demand and looks promising for higher returns. Now the sector is overflowed with “Me-too startups” which are lacking both differentiation and innovation, there is a huge demand for out of the box startups that entices the customers with its features.

Present and Future Revenue Generation

Now let’s take a look at Revenue section of Online Food Industry, globally and in different countries:

Global Revenue

• Revenue in the Online Food Delivery segment amounts to US$94,385m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 9.3%, resulting in a market volume of US$134,490m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$58,008m in 2019.

China Revenue

• Revenue in the Online Food Delivery segment amounts to US$39,369m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 9.1%, resulting in a market volume of US$55,870m by 2023.
• The market’s largest segment is Platform-to-Consumer Delivery with a market volume of US$22,778m in 2019.

US revenue

• Revenue in the Online Food Delivery segment amounts to US$19,472m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 5.9%, resulting in a market volume of US$24,461m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$13,472m in 2019.

Also read: – Business and revenue model of online food delivery marketplace

Germany Revenue

• Revenue in the Online Food Delivery segment amounts to US$2,083m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 4.9%, resulting in a market volume of US$2,518m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$1,741m in 2019.

Italy Revenue

• Revenue in the Online Food Delivery segment amounts to US$788m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 11.3%, resulting in a market volume of US$1,206m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$614m in 2019.

India Revenue

• Revenue in the Online Food Delivery segment amounts to US$7,092m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 9.9%, resulting in a market volume of US$10,363m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$5,825m in 2019.

Saudi Arabia Revenue

• Revenue in the Online Food Delivery segment amounts to US$191m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 17.8%, resulting in a market volume of US$368m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$159m in 2019.

Malaysia Revenue

• Revenue in the Online Food Delivery segment amounts to US$145m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 23.2%, resulting in a market volume of US$333m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$110m in 2019.

Turkey Revenue

• Revenue in the Online Food Delivery segment amounts to US$614m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 11.5%, resulting in a market volume of US$951m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$557m in 2019.

UK Revenue

• Revenue in the Online Food Delivery segment amounts to US$3,810m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 9.0%, resulting in a market volume of US$5,382m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$2,721m in 2019.

Canada Revenue

• Revenue in the Online Food Delivery segment amounts to US$1,416m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 10.4%, resulting in a market volume of US$2,104m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$1,020m in 2019.

UAE Revenue

• Revenue in the Online Food Delivery segment amounts to US$51m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 12.9%, resulting in a market volume of US$82m by 2023.
• The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$38m in 2019.

What’s Online for Food Industry?

The question always arises about what the internet holds for businesses. As we’ve read above, digitalization is reshaping the Food market but let’s talk in numbers. In research by McKinsey, it was found out online’s penetration of the total food-delivery market broke 30 percent in 2016. They predicted that the penetration rates will grow as the market mature, eventually reaching 65 percent per year.

Other industry stats and figures that show that the food ordering industry has huge potential:

• In L2’s study, 57 percent of restaurant apps included pick-up ordering while only 33 percent offered coupons that encourage consumers to repeatedly visit.
• Advance mobile ordering at quick service restaurants could be a $38 billion segment by 2020. Also, 63% of American smartphone owners — and 94% of Millennials — have used their phones to place fast food orders.
• Nearly one-quarter of smartphone owners (24%) regularly use food delivery apps, such as Postmates and Uber Eats.
• Smartphone owners use restaurant loyalty apps primarily to build up points or “stars” for rewards (72%), such as free drinks and birthday meals.

With all the above-mentioned facts and figures, it can be concluded that shifting your food business online or establishing your new business in the food industry can be the right choice. Of course, not everybody is meant to be in the Food Industry, but every business must shift online for steady growth. One can always choose the best business models which suit their interest and field.