What is India’s Food Delivery Market Size?

The online food delivery market in India is experiencing substantial growth, with Zomato leading in market share and Swiggy’s overall gross order value steadily increasing. By 2030, the industry is projected to expand significantly, driven by convenience and enhanced customer experience.

India’s food delivery market is on a robust growth trajectory. A joint report by Bain & Company and Swiggy predicts the market will cross Rs 2 lakh crore by 2030, growing at a compound annual growth rate (CAGR) of 18%. This expansion is fueled by increased digitization, higher disposable incomes, and a growing inclination among consumers to explore new culinary experiences.

Current Market Scenario

Market Size and Growth Rate

According to the report, the food delivery segment’s share in India’s food services market is expected to rise to 20% over the next seven years from the current 12%. The overall food services market, which includes dining out, ordering in, and other non-home-cooked food segments, is projected to double to Rs 9-10 lakh crore by 2030 from the current Rs 4-5 lakh crore.

Recovery and Resilience

The food delivery market experienced a slowdown in late 2023 but has been on a recovery path since the beginning of 2024. Rohit Kapoor, CEO of Swiggy’s food marketplace, noted that despite the temporary dip, structural issues in the market are minimal, and restaurant supply is increasing.

Factors Driving Growth

Improved Customer Experience

Enhanced customer experience, higher incomes, and a penchant for trying new things are key factors driving the market. Millions of new customers, particularly in the 16-22 age bracket, are expected to fuel the food delivery business in the coming years.

Increasing Average Spend

In 2023, the average spend per order on food was Rs 220-230. This figure is not expected to rise sharply, with projections for 2030 estimating the average order value at around Rs 230-250. Despite this modest increase, the ratio of average order value to GDP per capita in India remains higher than in markets like China, the US, the UK, Indonesia, and Brazil.

India’s food delivery market is set for substantial growth, driven by convenience, higher incomes, and enhanced customer experiences.

Market Penetration and Regional Insights

Growth in Eating-Out Occasions

The number of eating-out occasions is predicted to grow to 90-95 times a year by 2030, up from 60-65 times annually in 2023. India’s top 50 cities will continue to be the primary consumption hotspots, accounting for around 65-70% of the total food services market by 2030.

Emergence of New Formats

Convenience-led eatery formats such as quick service restaurants (QSRs) and cloud kitchens are expected to outpace the broader food services market in terms of growth. These formats are likely to grow 1.4 times between 2023 and 2030, compared to the broader market’s estimated CAGR of 11%.

Competitive Landscape

Dominance of Swiggy and Zomato

Swiggy and Zomato dominate India’s online food delivery segment. A research note by Goldman Sachs indicated that Zomato holds a 57% market share in the online food delivery market. Swiggy’s overall gross order value grew by 26% year-on-year in 2023, while Zomato reported a 31% year-on-year growth in the same period.

New Entrants

The food delivery market is also witnessing the entry of new players like Ola and Paytm, leveraging the government’s Open Network for Digital Commerce (ONDC) to offer food delivery services.

Zomato’s Milestone Achievements

Record Market Capitalization

Zomato’s market capitalization has soared, surpassing several established companies in the Nifty 50 index. The company’s strategic decision to increase the platform fee by 20% in key markets has been well-received, propelling its shares to record highs.

Strong Year-to-Date Performance

Zomato’s stock has surged almost 83% year-to-date in 2024, reflecting strong investor confidence in its business model. Global brokerage firm UBS has maintained a bullish stance on Zomato, increasing the target price to ₹260 from ₹250.

Future Outlook and Challenges

Sustaining Growth

As Zomato and Swiggy continue their upward trajectories, they face the challenge of maintaining momentum while balancing customer satisfaction and profitability. Innovation, expansion of service offerings, and operational optimization will be crucial for sustaining their market positions.

Here is the table of key facts for India’s food delivery market:

These key facts highlight the significant growth and potential of India’s food delivery market.

(India CSR)