Online Food Delivery Market Overview
The online food delivery market has experienced significant growth in recent years, driven by various factors that have transformed the way people order and receive their meals. Understanding the market size and the drivers behind its expansion is crucial to grasp the scope and potential of this industry.
Market Size and Projections
The global online food delivery market has witnessed remarkable growth. In 2021, the market size was valued at USD 152,000.0 million, and it is projected to expand at a compound annual growth rate (CAGR) of 10.98% during the forecast period, reaching USD 284,000.0 million by 2030 (LinkedIn).
While the online food delivery sector currently represents only 1% of the total food market, it is a rapidly growing segment. The food ordering and delivery sector stands at approximately $95.64 billion globally (FATbit). This growth rate surpasses the overall food sector’s annual growth rate of about 3.7% (FATbit).
The revenue for online food delivery platforms is expected to grow at nearly 13% per year from 2023 to 2027, with a projected market volume of US$1.65 trillion by 2027 (Routific). The global food technology market, which encompasses online food delivery, was valued at $260.07 billion in 2022 and is predicted to exceed $360 billion by 2028, demonstrating the industry’s growth and consumers’ reliance on tech-driven food solutions.
Growth Drivers
Several factors contribute to the expansion of the online food delivery market. These drivers are instrumental in shaping consumer behavior and shaping the future of the industry.
-
Convenience: Online food delivery offers unparalleled convenience to consumers. With a few taps on their smartphones or clicks on their computers, customers can have meals delivered directly to their doorstep. This convenience factor has revolutionized the way people order food, attracting a large customer base.
-
Changing Lifestyles: Busy lifestyles and hectic schedules have led to a higher demand for convenient meal solutions. Online food delivery caters to the needs of individuals and families seeking time-saving options, especially those who prefer to dine at home or their workplace.
-
Technological Advancements: The advancement of technology has played a significant role in the growth of the online food delivery market. User-friendly mobile applications, seamless ordering processes, and real-time tracking have enhanced the overall user experience, making it easier than ever to order food online.
-
Expanding Delivery Infrastructure: The continued development of delivery infrastructure has been crucial in enabling efficient and reliable food delivery services. The growth of delivery networks, logistics optimization, and the emergence of third-party delivery service providers have contributed to the successful expansion of the market.
-
Changing Consumer Behavior: Consumer preferences have shifted towards online shopping and digital experiences. The rise of e-commerce and the increasing comfort levels with online transactions have translated into the growing popularity of online food delivery.
These growth drivers, combined with technological advancements and changing consumer behavior, are propelling the online food delivery market to new heights. As the industry continues to evolve, it presents opportunities for further innovation and market expansion.
To explore regional insights and market segmentation within the online food delivery industry, refer to the respective sections of this article.
Regional Insights
Understanding the regional dynamics of the online food delivery market is crucial to gaining a comprehensive view of its growth and potential. In this section, we will explore the key insights from three major regions: North America, Asia-Pacific, and Europe.
North America
North America, led by the United States, holds a significant share in the online food delivery market. The region has witnessed substantial growth, with the most mature delivery markets in Australia, Canada, the United Kingdom, and the United States experiencing significant expansion in recent years. These markets have grown twofold to as much as fourfold in 2018 and 2019, becoming four to seven times larger compared to 2018, according to McKinsey.
The emergence of user-friendly apps and technologically enabled driver networks has transformed the ready-to-eat food delivery sector in North America. The United States is expected to be the top contributor to the market’s growth, followed by Canada, as per Precedence Research. These advancements have made ordering food online more convenient and accessible for consumers in the region.
Asia-Pacific
The Asia-Pacific region is projected to experience the fastest compound annual growth rate (CAGR) in the online food delivery market. This growth can be attributed to the sizable populations and expanding middle class in numerous countries within the region, providing ample opportunities for online food delivery providers to effectively cater to these growing consumer bases, according to Precedence Research.
China, in particular, has witnessed significant growth in the online food delivery market. Dominated by major players like Meituan and Ele.me, the Chinese market benefits from their scale, allowing them to offer competitive pricing and an extensive range of services. In contrast, the European market is more fragmented, with a mix of local and international players competing for market share, as reported by Statista.
India has also experienced substantial growth in the online food delivery market, driven by platforms such as Swiggy and Zomato. These platforms leverage their local knowledge and relationships with restaurants to provide a wide range of options to consumers. Additionally, the use of cash on delivery as a payment option has been a key driver of adoption in India, as highlighted by Statista.
Europe
The European online food delivery market is characterized by a mix of local and international players vying for market share. The market’s fragmentation presents both challenges and opportunities for providers in the region. While competition is intense, it also allows for diverse options and services to meet the varying needs of consumers.
With unique cultural and culinary landscapes, European countries offer a wide array of food delivery preferences. Local players often have an advantage in understanding and catering to these preferences. As the market continues to evolve, the competition among players in Europe remains fierce, driving innovation and improving the overall consumer experience.
By examining the regional insights of North America, Asia-Pacific, and Europe, we can appreciate the diverse dynamics and growth potential within the online food delivery market. Understanding these regional variations is crucial for market players to tailor their strategies and offerings to effectively meet the demands of consumers in different parts of the world.
Market Segmentation
To understand the dynamics of the online food delivery market, it is important to analyze its segmentation into platform types and payment methods.
Platform Types
Within the online food delivery market, platform types play a significant role in shaping the user experience. According to Precedence Research, the mobile applications segment held a significant revenue share in 2022. Mobile apps offer user-friendly platforms that allow customers to browse menus, place orders, and track deliveries easily, attracting a large user base.
In addition to mobile apps, online food delivery platforms also include websites and aggregators. Websites provide a convenient way for users to access the services using their desktop or laptop computers. Aggregators, on the other hand, act as intermediaries, consolidating menus and listings from multiple restaurants into a single platform.
Payment Methods
The availability of diverse payment methods is another crucial aspect of the online food delivery market. By offering various payment options, platforms cater to the preferences and convenience of their users.
Common payment methods in the online food delivery industry include:
-
Credit and debit cards: These traditional payment methods allow customers to make secure transactions without the need for cash. Users can simply input their card details during the checkout process.
-
Digital wallets: Digital wallets have gained popularity due to their convenience and security. Users can store their payment information in a mobile app or online platform, making transactions quick and hassle-free. Popular digital wallets include Apple Pay, Google Pay, and PayPal.
-
Cash on delivery: Some customers prefer to pay in cash upon the delivery of their food orders. This option provides flexibility and convenience, especially for those who may not have access to digital payment methods.
-
In-app payment systems: Many online food delivery platforms offer their own in-app payment systems, allowing users to link their bank accounts or credit cards directly to the platform. This streamlines the payment process and enhances the overall user experience.
It is important for online food delivery platforms to offer a variety of payment options to cater to the preferences of their diverse user base. By providing a seamless and secure payment experience, platforms can enhance customer satisfaction and encourage repeat business.
As the online food delivery market continues to evolve, the importance of platform types and payment methods will remain crucial in meeting the needs and expectations of consumers. By adapting to the preferences of their target audience, platforms can gain a competitive edge in this rapidly growing industry.
For more information on the food delivery market, including industry analysis and market trends, explore our other articles.
Emerging Trends
As the food delivery market continues to evolve and expand, several emerging trends are shaping the industry. Two notable trends are the rise of virtual restaurants and ghost kitchens, as well as the increasing popularity of contactless delivery.
Virtual Restaurants and Ghost Kitchens
Virtual restaurants, also known as ghost kitchens or cloud kitchens, have emerged as a unique segment within the food delivery market. These establishments operate without a physical storefront, focusing solely on delivery and takeout orders. By eliminating the need for a traditional dine-in space, virtual restaurants can benefit from lower staffing requirements and reduced operating costs. This allows them to offer specialized menus and cater to specific cuisines or dietary preferences.
Ghost kitchens are built-for-purpose kitchens located in low-rent areas with good access to transport links. They enable virtual restaurants to operate efficiently and fulfill orders from various delivery platforms. This model has gained popularity due to its flexibility and cost-effectiveness, especially for entrepreneurs and chefs looking to enter the food delivery market without the overhead costs associated with establishing a physical restaurant.
The virtual restaurant and ghost kitchen market has experienced significant growth in recent years and is expected to continue this trend in the future. The increasing demand for food delivery services, particularly through third-party delivery platforms like UberEats and DoorDash, has been a driving factor in this growth (LinkedIn). Additionally, the COVID-19 pandemic has further accelerated the adoption of virtual restaurants and ghost kitchens as traditional dine-in restaurants faced restrictions and closures. Consumers’ shift towards online ordering and delivery has created a favorable environment for the expansion of this market (LinkedIn).
Contactless Delivery
Contactless food and grocery delivery has become increasingly popular, driven by the health benefits of reducing physical contact. In response to the COVID-19 pandemic, customers have embraced contactless delivery as a safe and convenient option. This method allows customers to specify a safe place for deliveries or use locked storage receptacles to retrieve their orders.
Contactless delivery not only provides peace of mind but also offers efficiency and convenience. Customers can order their favorite meals or groceries from the comfort of their homes and have them delivered directly to their doorstep without the need for direct physical interaction. This trend aligns with the increasing reliance on online platforms and the advancement of technology in the food delivery market.
As technology continues to advance, it is expected that virtual restaurants and ghost kitchens will become even more streamlined and efficient, optimizing order processing and delivery logistics. The convenience and efficiency offered by these models resonate with consumers’ evolving preferences and lifestyles, further driving the growth of this segment within the food delivery industry (LinkedIn).
The emergence of virtual restaurants and ghost kitchens, along with the increasing demand for contactless delivery, highlights the dynamic nature of the food delivery market. As consumer preferences and behaviors continue to evolve, it is essential for industry players to adapt and innovate to meet the changing needs of customers.
Market Challenges
As the online food delivery market continues to expand, it faces several challenges that impact the industry’s profitability and competitive landscape. Two key challenges are profitability concerns and the increasingly competitive market.
Profitability Concerns
Despite the rapid growth of the online food delivery market, profitability remains a concern for many delivery platforms. According to McKinsey, most delivery platforms have struggled to achieve profitability, with only a few exceptions. This is a result of various factors, including high operational costs, fierce competition, and the need for continuous investment in technology and logistics.
To provide customers with timely and efficient delivery services, delivery platforms need to maintain a fleet of drivers, manage logistics, and invest in technology infrastructure. These expenses, coupled with the need to offer competitive pricing and discounts to attract customers, can strain profit margins. Achieving profitability in this highly competitive market requires innovative strategies, efficient operations, and a focus on cost management.
Competitive Landscape
The online food delivery market is highly competitive, with numerous players vying for market share. The industry’s explosive growth, as highlighted by Statista, has attracted both established companies and startups to enter the market. This has led to intense competition and a constant battle for customer acquisition and retention.
Notably, the market has seen the emergence of rapid delivery/quick-commerce platforms, such as Getir and JOKR, which add a new class of competitors to the fight for market share. Additionally, significant investments and consolidations have occurred in the food delivery space, with companies like Wolt, REEF Technology, and Uber making substantial moves to strengthen their positions (McKinsey).
The competitive landscape poses challenges for both existing and new players in terms of market differentiation, customer loyalty, and expanding their service offerings. To stay ahead, delivery platforms need to continually innovate, enhance customer experiences, and build strong partnerships with restaurants and other stakeholders.
Despite the profitability concerns and competitive landscape, the online food delivery market continues to evolve and adapt. Companies are exploring new strategies, such as virtual restaurants and ghost kitchens, and implementing contactless delivery options to meet changing customer preferences. By addressing these challenges and leveraging emerging trends, the industry aims to achieve sustainable growth and profitability in the future.
Future Outlook
As the online food delivery market continues to expand, the future outlook looks promising with significant revenue forecasts and global market expansion.
Revenue Forecasts
According to a study by Precedence Research, the global online food delivery market size was USD 190.28 billion in 2022 and is projected to reach approximately USD 517.37 billion by 2032, with a compound annual growth rate (CAGR) of 10.52% from 2023 to 2032. This growth can be attributed to factors such as increasing internet penetration, changing consumer preferences, and the convenience offered by online food delivery services (Precedence Research).
Data from Statista Market Insights reveals that the global online food delivery market is estimated to have surpassed the US$1 trillion mark in 2023. With a projected CAGR of 10% from 2024 to 2028, the market volume is expected to reach US$1.79 trillion by 2028 (eCommerceDB).
Global Market Expansion
The online food delivery market is witnessing rapid expansion globally. By 2028, the market is projected to reach a valuation of US$1.79 trillion, with significant shifts in the rankings of countries. China is forecasted to maintain its position as the top global online food delivery market through 2028, followed by the United States. Notably, India is anticipated to rise to the third position by 2026, showcasing its potential for significant growth and development in the coming years.
The growth rate of the online food delivery market has moderated since its peak, with a modest growth rate of 13% recorded in 2022. Looking ahead, forecasts suggest a continued positive trend but at a decelerating pace. Market growth for 2024 is projected to be slightly lower at 18%, and until 2027, the growth rate is expected to slow down further, potentially reaching as low as 7%. This indicates a maturing market with a steady growth trajectory (eCommerceDB).
As the online food delivery market expands, it presents ample opportunities for both established and emerging players to capitalize on changing consumer behaviors and preferences. With the increasing adoption of technology and growing demand for convenience, the future of the online food delivery market looks promising, with continued revenue growth and global market expansion on the horizon.
