The Curry Chronicles: A Spicy Dive into India’s Online Food Delivery Industry through Secondary Research

4 min readApr 20, 2023

Image Source: https://www.businesstraveller.com/india/

To clarify the scope of my research, I would like to distinguish between in-scope and out-scope items. In-scope items refer to meals that are ordered online and delivered through a platform. On the other hand, out-scope items include phone orders.

According to a report by BusinessWire, the online food delivery industry in India had a valuation of INR 410.97 billion in 2021 and is projected to grow at a CAGR of 30.00% during the forecast period of 2022–2027, eventually reaching a value of INR 1,845.76 billion by the end of 2027. The industry is experiencing growth due to the rapid digitalization and increasing acceptance of online food delivery services by consumers in both tier I and tier II cities. Factors such as the growing adoption of smartphones and internet services, an increase in the number of working families, particularly with women joining the workforce, and fast-paced lifestyle changes are driving this trend.

What Are the Primary Factors Driving Growth in the Online Food Delivery Industry?

In India, the rising number of smartphone users and greater use of the internet have contributed to the increased demand for online food ordering via mobile apps. As both tier I and tier II cities in India continue to accept and incorporate online food delivery mobile apps, the industry is expanding.

To entice customers, a number of online aggregators have partnered with restaurants to offer combo packages and single-serve meals. Food delivery platforms have also introduced subscription services for regular customers, eliminating delivery charges that were previously applied to each order.

The Covid Impact on the Online Food Delivery Industry:

The COVID-19 pandemic and subsequent nationwide lockdowns initially caused some hindrances in the expansion of the online food delivery industry. Nevertheless, it has ultimately had a favorable effect on the industry, as it enabled individuals to satisfy their desire to dine out while still adhering to social distancing guidelines. While there was a decline in online food orders during the second wave in April 2021, the surge that was observed in Q3 2020 has now returned to levels that were prevalent prior to the pandemic.

Online Food Delivery Industry Segmentation:

The delivery service industry is primarily segmented into two categories: food delivery from restaurants and grocery deliveries. Currently, the grocery delivery space is rapidly expanding, with a particular focus on fruit and vegetable delivery, organic food delivery, meat and fish delivery, and specialty store items delivery.

While the majority of the current order numbers are generated from top-tier cities such as Bangalore, Mumbai, Delhi & NCR, Pune, Hyderabad, Chennai, and Kolkata, there is an increasing number of customers from tier 2 and 3 cities as well.

Regarding demographics, Statista predicts that Gen Z and Millennials (between the ages of 22 to 44 years) account for 80% of the consumers.

Who are the key players in the Online Food Delivery Industry?

Zomato and Swiggy are the primary players in the Indian online food delivery industry, serving as key aggregators. Although both Uber eats, Amazon Foods and Ola eats have attempted to enter the delivery industry, they have been unable to capture the attention of consumers.

What are some alternative online food delivery choices offered to consumers in India?

Bundl Technologies Pvt Ltd (Swiggy)
Zomato Limited
Foodvista India Private Limited (FreshMenu)
Jubilant FoodWorks Ltd (Dominos)
Yum! Brands, Inc. (Pizza Hut)
Plaza Restaurants Private Limited
Curefoods India Private Limited
Rebel Foods (Faasos)
Sky Gate Hospitality Pvt Ltd
Poncho Hospitality Pvt. Ltd

According to a report by Google and Boston Consulting Group titled ‘Demystifying the online food consumer,’ India’s online food ordering industry is anticipated to reach US$8 billion by 2022. The report highlights that although the food technology industry is relatively new in India, it is one of the fastest-growing in terms of reach, engagement, and investment. The report shows that food tech funding has grown 25 times in the last five years. Rising internet penetration, higher order frequency, favorable consumer disposition, expanding reach in smaller cities, and network of restaurants on food-tech platforms are macro trends driving momentum in the industry. The study reveals that peer or network advocacy (52%) plays a primary role in attracting people to try online food ordering for the first time, followed by advertisements (19%). While delivery charge is the main reason for not ordering food online in metro cities, a lack of trust in apps (29%) emerged as the barrier in tier I cities. Overall, online spending in India is rapidly rising and is expected to grow at 25% over the next five years, reaching over US$130 billion.

The most attractive feature for consumers is the convenience of doorstep delivery, available anytime and anywhere. Consumers are often motivated by rewards, cashbacks, and loyalty benefits. However, factors such as negative reviews and word of mouth, as well as past bad experiences, can deter customers from trying online food delivery apps.

By providing consistent and effective services, coupled with innovative features, this concept has the potential for successful growth. In the future, companies may look to expand their businesses to Tier 2 cities, where there are also a significant number of working youngsters.

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