On-demand delivery platforms that offer a wide range of items (such as various cuisines, groceries, etc)

On-demand delivery platforms that offer specific types of food or cuisine

Platforms that offer ready-to-cook meal kits to individuals who are interested in cooking, but have limited time or skills. Meal kits usually include recipes with step-by-step instructions along with pre-portioned ingredients. Food delivery is often carried out by independent contract workers who are either registered with the platform or employed directly by the platform.

Platforms that prepare and deliver meals based on rotating menus that allow the customer to choose a meal plan of up to multiple dishes for a week with a low level of consumer involvement in cooking and plating. Food delivery is often carried out by independent contract workers who are either registered with the platform or employed directly by the platform.

Infrastructure providers that offer delivery or dispatch management systems

Infrastructure providers that offer white label online ordering websites and apps for restaurants to build their own in-house solutions

Infrastructure providers that offer solutions to help restaurants integrate and centralize online ordering and delivery systems from multiple third party vendors

From fast food to fine dining, everything but the kitchen sink is suddenly just a tap away.

Online Food Delivery

Overview

<div>
  <h3>
    New players focus on niche segments to stay competitive
  </h3>
  <p>
    An online food delivery (OFD) platform is a website or mobile app that allows users to place food orders, make payments, and track delivery orders in real time. The earliest and most popular model in the industry is the aggregator model, in which the platform hosts menus from multiple restaurants for users to order from. Newer players in the industry have focused on niche segments such as prepared meals and meal kits. Already a growing segment, online food delivery gained immense traction recently due to restaurant closures and social distancing practices to mitigate the spread of the Covid-19 pandemic. 
  </p>
</div>


The US online food delivery market could reach USD 60.1-114.4 billion by 2026

Market Sizing

<div>
  <p>
    <b>Online food delivery experienced significant growth due to restrictions on dine-in restaurants:</b>
  </p>
  <p>
    Customer transactions at restaurants declined sharply during the height of the pandemic, -37% YoY in April 2020 amid lockdown restrictions and dine-in closure mandates, but which subsequently improved to 32% YoY in March 2021. Meanwhile, digital orders through third-party food delivery apps grew by 207% YoY for the year ended March 2021. Consequently, many online food delivery platforms reported accelerated growth in revenue in 
    FY2020 and FY2021:
     
  </p>
  <ul>
    <li>
      <p>
        Marley Spoon – +126% YoY in the US (FY2020); 
        +17.5% YoY in the US (FY2021) 
      </p>
    </li>
    <li>
      <p>
        HelloFresh – +107% YoY in the US (FY2020); 
        +59% YoY in the US (FY2021)
         
      </p>
    </li>
    <li>
      <p>
        Delivery Hero – +95% YoY globally (FY2020); 
        +89% YoY globally (FY2021)
      </p>
    </li>
    <li>
      <p>
        DoorDash – +226% YoY globally (FY2020); 
        +69% YoY globally (FY2021)
      </p>
    </li>
    <li>
      <p>
        Deliveroo – +57.5% globally (FY2020); 
        +57% YoY globally (FY2021) 
      </p>
    </li>
  </ul>
  <p>
    <b>Major online food delivery platforms took initiative to help restaurants:</b>
  </p>
  <ul>
    <li>
      <p>
        DoorDash and UberEats waived fees charged to restaurants at the onset of the pandemic. DoorDash announced a five-year USD 200 million Main Street Strong Pledge in November 2020 to continue supporting restaurants and drivers; offered a further USD 10 million in cold weather grants to struggling restaurants in October 2020; partnered with the California Restaurant Association (CRA) in August 2021, to support small businesses in the area.
      </p>
    </li>
    <li>
      <p>
        Uber Eats launched an in-app donation button for restaurants in April 2020 and proposed an additional USD 2 million to the Restaurant Employee Relief Fund; launched the Eat Local program in February 2021, committing USD 20 million to continue supporting restaurant owners and operators. 
      </p>
    </li>
    <li>
      <p>
        GrubHub collaborated with the Restaurant Strong Fund in November 2020  to offer independent restaurants grants to help with outdoor dining during the winter. They offered independent restaurants 1) USD 2 million in grants in  May 2021, to help reopen restaurants under Covid-19 requirements and 2) USD 4 million in grants in October 2021, to support restaurants that were operational during the pandemic.   
      </p>
    </li>
  </ul>
  <p>
    <b>State and local governments capped online food delivery commissions:</b>
     
  </p>
  <p>
    As a relief measure for restaurants, several US cities, such as Washington D.C., New York, San Francisco, and Jersey City, implemented a temporary cap on commissions charged by online food delivery platforms. Rate caps ranged from 20% (New Jersey) to 10% (Oregon), with most cities setting rate caps at 15% (New York, San Francisco). While these commission caps have since been lifted in some states and cities (such as Washington, Denver, and Chicago), following a lifting of restrictions on indoor dining, a few cities (New York, San Francisco, Minneapolis) have passed legislation to make these commission caps permanent.
  </p>
</div>


COVID19-IMPACT

Market Mapping

<div>
  <p>
    The aggregator (general) segment is highly populated compared to the other niche segments, mostly due to its large potential market size. The segment is the popular pick for incumbents, which are mostly established tech players with an existing e-commerce presence. More established/mature disruptors are also largely present in the aggregator (general) segment, as well as in meal kit delivery. 
  </p>
  <p>
    The larger disruptors in the general aggregator segment - including DoorDash, Deliveroo, and Delivery Hero – are in growth stage, and have regularly raised capital from the equity and equity-linked issuance markets over the last two years. The general aggregator segment also has some newer startups in the pre-seed/seed stage using alternative business models (e.g., commission-free) or operating in niche sectors (e.g. high-end restaurants) to try to compete with larger incumbents and disruptors.
  </p>
  <p>
    The majority of startups in the seed or pre-seed stages tend to be clustered in the meal kit delivery and prepared meal delivery segments, with these two segments also seeing more early stage start-ups.
  </p>
</div>


The Disruptors

<div>
  <p>
    As of July 2021, Doordash was the most dominant player in the space with a 57% share of the US online food delivery aggregator market, ahead of global leader UberEats (23%) and legacy US market leader Grubhub (16%). The company, which hadn’t reached 50-state penetration until 2019, took over as market leader from Grubhub that year, and has since further eroded Grubhub’s market share (from  40% in August 2018). However, market share is fragmented across US major cities. DoorDash, for example, is dominant in its home market San Francisco, as well as in Houston and Washington, while UberEats leads in Miami and gained significant market share in Los Angeles through its acquisition of disruptor Postmates in 2020. New York is pretty evenly split among the three players, in terms of share of sales.
  </p>
  <p>
    In the more niche meal kit segment, German company HelloFresh is the largest player in the US, with an estimated market share of almost 60% as at September 2020. The company’s market share growth in the US has mainly come at the expense of rival Blue Apron, whose US market share has declined significantly (from over 20% in January 2019 to roughly 9% by July 2020), amid diminishing customer loyalty. 
  </p>
  <p>
    Subasket is the highest funded disruptor in the prepared meals segment. The company, which began operations as a meal kit provider, expanded into prepared meals in August 2020 followed by the launch of its full-service food delivery model in January 2021.  
  </p>
  <p>
    Ordermark (more than USD 150 million) and Deliverect (~USD 87 million) are the highest funded disruptors. Both companies operate online ordering platforms for restaurants and have surpassed the USD 1 billion order value mark.
  </p>
</div>


Online Food Delivery

Online Food Delivery

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