Food delivery market forecast in India
The relevance of research
The delivery market is still one of the promising restaurant segments in India. The popularity of ready meals is increasing not only in the delivery segment. Prepared food is one of the fastest growing categories in grocery retail.
Purpose of the study
Analysis of the state of the food delivery market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the food delivery market
Content
Chapter 1. Key Components of the Food Delivery Market
1.1. Market size
1.2. Growth rate of the food delivery market
1.3. Food delivery market trends
1.4. The main problems of the industry
1.5. Life cycle stage of the food delivery market
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. Analysis of sectoral indicators of financial and economic activity
1.9. Price analysis
Chapter 2
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP analysis of the food delivery market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Compact location of industry companies in certain regions
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers in the food delivery market
4.4. Prospects and growth drivers for the food delivery market
4.5. Forecast for the development of the food delivery market in the context of the current economic crisis due to covid-19
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Chapter 1. Key Components of the Food Delivery Market
1.1. Market size
At the end of 2020, the size of the food delivery market amounted to about ... billion Rs.
...
In general, food delivery is more popular than the delivery of groceries and rations: it is most widely represented regionally. In addition to federal services, each region has dozens of cafes and restaurants that deliver food themselves.
1.2. Growth rate of the food delivery market
Growth rate of the food delivery market in the period 2016-2020 let's say...
Diagram 1. Dynamics of the food delivery market, 2016–2020, billion Rs.
1.3. Food delivery market trends
Let's highlight the main trends in the food delivery market:
...
1.4. The main problems of the industry
When organizing a food delivery service, a single establishment works directly with customers, answering calls and processing orders.
...
Delivery from chain restaurants is organized according to more complex principles than from a separate establishment. The call center operator must not only accept and place an order, but also decide from which point it will be more convenient to deliver food to the address, how best to load the couriers so that they serve the largest number of orders in one trip. What are the possible errors here:
...
Currently, such problems are solved by various automation services. Also, the solution to the problem is delivery through aggregators, which is important for large cities, where there are thousands of orders. Aggregators not only unload restaurant delivery services during peak hours, but also bring in additional customers who use them. The only caveat: you need to pay a percentage of the order to the service. It is also desirable to locate restaurants/kitchens in several areas of the city in order to ensure the fastest possible delivery.
1.5. Life cycle stage of the food delivery market
The food delivery market is approaching the stage of early maturity. Competition in the food delivery market has intensified and the number of players has increased greatly, however, after all restrictions related to covid-19 are lifted, some small companies are likely to have to close, which will strengthen the position of larger players.
The maturity stage is the longest of all life cycle stages. It is built on the consumption of conservative consumers, on the popularity and wide representation of the product, which ensures a stable level of sales over a long period. A high value at the stage of maturity gets the speed of the company's reaction to the actions of competitors. When working with the target audience, the emphasis is on retaining the consumer, searching for new micro-niches, monitoring product satisfaction and implementing prompt measures when product loyalty is reduced.
...
1.6. Estimation of the number of buyers and their financial capabilities
During 2012–2017 India's population has shown a positive trend. However, in 2018 the vector has changed - the population ...
...
According to the results of the 1st half of 2021, real disposable income ... .
1.7. Estimated consumption per capita
The consumption of food delivery services per capita is calculated by GidMarket based on the total population of India.
...
Price requirements have also increased. When paying for an order with home delivery, buyers want to receive not only their order, but also maximum bonuses - coupons, gifts from the company. Technologies are an important factor: a site convenient for ordering, a mobile application, the ability to choose various payment methods for an order.
1.8. Analysis of sectoral indicators of financial and economic activity
According to GidMarket's calculation, based on data from the financial performance of key companies in the market, the gross margin in the food delivery industry in India in 2018-2019. was below the level of similar financial ratios in the economy of all industries as a whole.
Table 1. Gross margin of the food delivery industry compared to all sectors of the Indian economy, 2016-2020, %
At the same time, profitability before tax in the food delivery service industry is not only much lower relative to all sectors of the Indian economy, but has been in the negative zone throughout the entire period. This may be due to both the pricing policy undertaken by industry leaders to capture the maximum market share, and the active development of federal chains in the regions, when a large number of new outlets leads to a decrease in the overall profitability of the enterprise.
...
In general, the analysis of industry financial ratios allows us to state financial instability in the industry, which is associated with an insufficiently developed process of delivery services in India, the implementation of projects to expand federal networks (when not all outlets have reached the break-even level yet), attempts to implement unprofitable projects and the conscious management of the largest companies are moving into negative profitability values due to aggressive pricing policy, due to the need to capture market share and form a loyal target audience.
1.9. Price analysis
The consumer price index for food delivery services was calculated by GidMarket on the basis of official statistics on price indices for products of fast food catering establishments and taxi fares.
...
Continuing to analyze the price component of the market, we note that the food delivery service is paid, regardless of who provides it. These are costs that are already included in the price, even if the delivery service (the restaurant's own delivery service, specialized delivery company) offers it free of charge to the buyer.
...
Chapter 2
2.1. Economic components
India GDP
GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation.
...
2.2. Social Components
Increasing urbanization
During 2014–2020 urbanization is taking place - the number of urban residents is increasing, while since 2015 the population of rural settlements has been decreasing. In 2019, the share of the urban population reached 75%; in 2020, the share remained at the same level.
The migration influx in large cities leads to an additional supply of labor, a change in the structure of the day towards an increase in working hours and time spent on the road to / from work, which reduces the amount of free time and stimulates the demand for food delivery services.
...
Changes in consumer behavior during the pandemic
The coronavirus outbreak has drastically affected food delivery services. In the conditions of quarantine and paranoia, business was forced to come up with new formats of work. Shoppers now see delivery as a way to keep contact when buying food to a minimum, as companies have launched contactless delivery. Strengthening measures against the spread of coronavirus across India, the transfer of employees to remote work - all this will further spur demand for food delivery.
Thus, covid-19 has a positive impact on the food delivery market, however, on the other hand, a decrease in real incomes of the population leads to a general drop in consumer demand.
Decline in the number and income of the population (discussed in paragraph 1.6.). Negative influence.
2.3. Technological components
Internet penetration
For a long time, pizza and sushi were pretty much the only food you could order home. With the advent of online delivery aggregators, the assortment began to expand, and the way food is ordered has changed: since 2015, the Internet will begin to lead, the number of orders through this channel begins to grow significantly.
Chart 11. Internet penetration in India among the audience of 16 years and older, %, 2016-2020
Transport congestion
...
2.4. Political Components
State restrictions
...
Tax preferences, concessional lending
In India, programs are being implemented to support entrepreneurship and develop domestic production. However, for ordinary entrepreneurs, their availability remains in question.
...
2.5. STEP analysis of the food delivery market
According to the results of the STEP-analysis, macro-environment factors have a more positive impact on the development of the food delivery market.
...
Table10. STEP analysis of factors affecting the food delivery market
It should be noted the recovery of GDP, the continued growth in the level of urbanization, the penetration of the Internet, the growth in the share of delivery in the turnover of public catering, the absence of strict regulation by the state, changes in consumer behavior in a pandemic - expanding consumer preferences, stimulates demand for food delivery services. At the same time, such factors as the instability of the rupee exchange rate, traffic congestion, the difficulty of obtaining tax preferences, population decline and low solvency have a restraining effect on the market.
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
Within the framework of national and global competition, it is chain players that dominate the food delivery market, which worsens the development opportunities for single operators.
...
3.2. Number of competitors and relative market shares of the largest competitors
The largest operator in the food delivery market, despite the active development of aggregator companies, is Dodo Pizza.
...
The total revenue of the top 5 food delivery market operators is calculated based on official reporting data. The study of the dynamics of total revenue is indicative from the point of view of the analysis of growth trends.
...
Diagram 14. Dynamics of the total revenue of the largest food delivery market operators (TOP-5) in India, 2016–2020, billion Rs.
3.3. Compact location of industry companies in certain regions
The largest number of food delivery services is observed in the largest Indian cities with a million inhabitants, where the experience of ordering ready-made food to work or home is high.
The number of companies is gradually growing in relatively small Indian cities with a population of 100 to 500 people. The vector of development of the food delivery market has shifted to the regions that will become the growth driver of this segment.
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
In the first half of 2020, many markets felt the impact of the pandemic and the onset of the economic crisis. Let's analyze the data on the impact of recent crises on the food delivery market ...
4.2. Analysis of the impact on the state aid industry at the current date
Since the introduction of restrictive measures in India related to the spread of a new coronavirus infection, the state has been providing the necessary support measures to business representatives who have encountered objective difficulties. Some of them are systemic and apply to all organizations and individual entrepreneurs, while others are intended only for companies and businessmen working in certain sectors of the economy.
...
4.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers in the food delivery market
After the introduction of restrictions on the movement of citizens due to covid-19, delivery services continued their work, however, with significant changes.
After the start of the epidemic, some companies launched a new service - contactless delivery of orders.
...
After the removal of all restrictions, most customers will continue to actively use the delivery service, as they appreciate its convenience. Thus, covid-19 has brought positive changes to the delivery industry.
The main barriers currently hindering the development of the industry include:
Growing delivery of ready meals by retailers;
Weak logistics infrastructure in certain regions;
Unfavorable weather conditions, which make it difficult to deliver quickly during rainy seasons and winters, and make the shipping cost per order relatively high.
4.4. Prospects and growth drivers for the food delivery market
Perspectives:
...
The main growth drivers will be:
Digitization of the industry;
Preservation of the remote mode of work for some employees and, in general, the growth in the popularity of this format of work;
Growth in the share of delivery in the turnover of public catering;
Expansion of geographical coverage by major network market players;
The continuing desire of Indians to limit social contacts and reduce visits to crowded places even after the lifting of the self-isolation regime;
Possible introduction of QR codes for visiting restaurants.
4.5. Forecast for the development of the food delivery market in the context of the current economic crisis due to covid-19
Businesses have no illusions that the coronavirus will soon be defeated, according to a survey of businessmen organized by the online research service Oprosso. One of the main tools for salvation is remote work. Almost a third of entrepreneurs believe that they will be able to work remotely without loss for the business for several months ...
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
Industry volume over the past 5 years
Industry dynamics in 2008–2009, in 2014–2015, in 2016–2020
Dynamics of macroeconomic indicators over the past 9–10 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
Open sources (websites, portals)
Issuer reporting
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2021-2025)
Diagrams
Diagram 1. Dynamics of the food delivery market, 2016–2020, billion Rs.
Diagram 2. Industry life cycle stage
Diagram 3. Population dynamics in India, as of 01 Jan. 2012–2021, million people
Diagram 4. Dynamics of real incomes of the population of India, % to the previous year, 2012–1 half a year. 2021
Chart 5. Consumption in the food delivery market per capita, 2016–2020, Rs./person
Chart 6. Profitability before tax (profit of the reporting period) in the food delivery industry in comparison with all sectors of the Indian economy, 2016-2020, %
Diagram 7. Current liquidity (total coverage) for the food delivery industry for 2016–2020, times
Chart 8. Dynamics of India's GDP, 2012-May 2021, % to the previous year
Diagram 9. Monthly dynamics of the US dollar against the rupee, Rs. for 1 US dollar, 2016-Sep. 2021
Diagram 10. Turnover of public catering, 2016–Jul. 2021, billion Rs.
Chart 11. Internet penetration in India among the audience of 16 years and older, %, 2016-2020
Diagram 12. STEP analysis of factors affecting the food delivery market
Diagram 13. Shares of the largest competitors in the food delivery market in 2020, %
Diagram 14. Dynamics of the total revenue of the largest food delivery market operators (TOP-5) in India, 2016–2020, billion Rs.
Diagram 15. Compactness of location of companies in the industry in certain regions, Sept. 2021, %
Diagram 16. Forecast of the food delivery market in 2021–2025, billion Rs.
Tables
Table 1. Gross margin of the food delivery industry compared to all sectors of the Indian economy, 2016-2020, %
Table 2. Absolute liquidity of the food delivery industry compared to all sectors of the Indian economy, 2016-2020, times
Table 3. Consumer price indices in the food delivery market in India in 2016–Aug. 2021, %
Table 4. Average prices in the food delivery market in the Union Territories, 2020, Rs.
Table 5. Urban and rural population in India in 2014–2020, million people, %
Table 6. Main companies participating in the food delivery market in 2020
Table 7. Assessment of the impact of recent crises on the industry
Table 8. Analysis of the impact on the industry of the state aid proposed as of April 02.10.2021,
Table 9. Forecast indicators of the development of the Indian economy
Table 10. STEP analysis of factors influencing the food delivery market
All reports