Food delivery segment to drive restaurant industry revival: Zomato report

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August 20, 2020 3:15 AM

The online food aggregator said it had delivered 7 crore food orders since the imposition of lockdown on March 25. The firm estimates that Indians have ordered 20 crore times from food aggregators and direct restaurant channels since the lockdown.

Zomato claims they are doing as much as 50% better in residential areas than commercial ones.

The revival of the Indian restaurant industry will be led by the food delivery segment. A report by Zomato released on Wednesday revealed that the segment was estimated to reach pre-Covid business levels in the next two to three months. The food delivery industry has largely recovered, with the overall sector clocking around 75-80% of pre-Covid gross merchandise value (GMV), founder & CEO Deepinder Goyal stated in the report that assessed the state of the country’s restaurant industry in the middle of the pandemic.

The food delivery sector includes the orders to be delivered by restaurants through their own websites and not just those by aggregators like Zomato and Swiggy.

Deliveries are being led by residential areas — Zomato claims they are doing as much as 50% better in residential areas than commercial ones. “Restaurants in and around commercial districts are expected to take the longest to recover,” the firm said. Restaurants have lost a considerable percentage of customers as corporates shifted to working from home. Office goers typically drive order volumes during the day.

Certain pockets in some cities, especially the affluent neighbourhoods that tend to “combine home entertainment with outside food”, are clocking higher GMV than before, the report said. Although sporadic lockdowns in some cities continue to disrupt businesses, food delivery volumes bounce back as soon as these lockdowns are lifted, the firm pointed out. Not surprisingly, a sizeable chunk of dine-outs have shown agility to pivot to food delivery. “The number of restaurants offering food delivery are at 70% of pre-Covid levels. Out of this, about 5% restaurants did not offer food delivery services pre-Covid,” Zomato said.

The online food aggregator said it had delivered 7 crore food orders since the imposition of lockdown on March 25. The firm estimates that Indians have ordered 20 crore times from food aggregators and direct restaurant channels since the lockdown.

However, the dining out industry in India is operating at a sluggish 8-10% of pre-Covid levels primarily due to the lockdown and consumers’ preference to stay indoors out of the fear of being infected.

Of the 83% restaurants that are not open for business, 10% have already shut shops permanently and Zomato anticipates an additional 30% restaurants to not reopen at all. The remaining 43% are closed right now but are likely to open, as and when the situation turns better.

In cities where restrictions have been lifted, only 17% dine-outs are open for business at the moment.

“Zomato’s dining out transactions in markets like New Zealand, UAE and Portugal are already back to pre-Covid levels. However, recovery in India will be slow and would largely be driven by industry’s ability to build back consumer confidence,” the firm said.

About 60% restaurateurs said they estimated to retain less than half of their original business volumes for a few months even after the virus attack subsides.

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