Bengaluru continues to hold pole position in terms of online food delivery orders per day, according to a report by RedSeer Management Consulting. Delhi, Mumbai, Hyderabad and Pune follow in that order with Chennai emerging as the sixth largest market for the food-tech industry, crossing the 10,000 deliveries a day mark for the first time. The report states that India witnesses about 3 lakh food delivery orders every day, with Bengaluru having 25-30% of that share. It was prepared for the January-March period of FY17.
It also stated that food delivery players are focusing on increasing their penetration in the existing cities over expansion to new geographies. The reason for that is while online food delivery companies served 2.7-3 lakh orders per day on an average in the March quarter, about 90% of orders came from top six cities.
Even Euromonitor said, “In India, home delivery is largely limited to India’s urban areas, and a large portion of the population still resides in rural regions, where there is little or no demand for home delivery. The demand for food delivery services is also limited to a very specific subset of the Indian population.”
Talking about food tech industry growth, Rohan Agarwal, senior consultant, RedSeer, said, “In 2016, online food delivery market had a gross merchandise value of $300 million and it is expected to grow at a compound annual growth rate of about 60% over the next 5 years to hit a gross merchandise value of $2.5-3.5 billion by 2021.”
While the size and potential of food delivery market in India seems attractive, widespread challenges and lack of experience had forced some players like Tiny Owl to shut down and some like Foodpanda to downsize. Besides facing competition from their peers, they also have to fight bigger and deep pocketed food chains like Pizza Hut and Domino’s which have their own robust delivery services.