You are currently viewing Food Delivery’s Growing Popularity and Market Expansion

Food Delivery’s Growing Popularity and Market Expansion

Imagine coming late from a tedious day at work and crashing straight to bed just to hear your stomach growling. Or, some guests showing up randomly, or having that peculiar urge to munch on your favorite pepperoni pizza at 3 am.

Only in such moments, you’ll realize how special a food delivery service is. Getting your favorite food within less than an hour is no less than a blessing.

Here, we are about to take a sly look into the popularity and growth of food delivery services. So, hold on tight!

Online Food Delivery: The Idea Behind

Surprisingly, the concept of food delivery isn’t just one or two decades old. History takes us back to Naples, Italy, in 1889 when Queen King Umberto and Queen Margherita wanted a pizza from Pizzeria di Pietro and kind of invented the concept of food delivery.

Today, 34% of US customers are ordering food up to $50 worth. Who would’ve known the queen would leave this legacy?

In the USA, the World Wide Waiter first-ever introduced the delivery service in 1995, which turned out to be a breakthrough. According to the New Yorker, food delivery orders were 7% of restaurant sales in the U.S. in 2016.

That was just the beginning as now in the post-pandemic era, US customers are increasing, only falling behind Chinese counterparts who are a giant in the industry.

Food Delivery: How Does The System Work?

To understand how the delivery system works, let’s break it down into simpler terms.

You either order food directly from the restaurant or through a third party. In any case, the main cost is that of the food ordered.

A third party might impose a service fee that follows the tax imposed. The delivery fee covers the cost of the fuel. Lastly, there is the optional tip to the rider.

The restro app has some interesting figures to show as the average American is spending no less than $232 per month only on meals delivering apps.

That’s a huge amount as they end up spending $2,792 on food each year. These stats are enough to show the roaring growth of the food delivery market.

Benefits Of Using A Delivery Service

Let’s be honest – food delivery services are winning for every party involved.

From a restaurant owner’s point of view, incorporating a delivery service along with a franchise ensures plenty of profits. The reach can be far more significant.

For example, DoorDash is proud to get up to 40% of the US population. Oftentimes, food delivery offers more add-on options such as snacks or drinks, that significantly boosts the revenue generated.

Moreover, it becomes fairly easy for them to promote new updates by sending notifications to regular customers.

For the customer, food delivery saves the hassle of driving to the franchise or waiting in long queues. They get the food cooked and delivered, saving ample time and effort. They can also explore new restaurants and have a wide range of options to choose from.

All things aside, the apps offer inexpensive yet popular meal options to get to as many consumers as possible.

It is easy to make payments via multiple payment methods such as through card, PayPal, or cash on delivery, and all are only more convenient for the customer. The average revenue per user in the Online Food Delivery segment is almost US$179 billion in 2022, suggesting mounting popularity.

Impact Of Digitalization

Digitalization boosted the concept of food delivery services and its popularity across the borders that was well fitted for the changing world demands.

According to a survey by the U.S. National Restaurant Association, more than 60% of millennials in the U.S. want restaurants to allow the placement of online orders for takeout and delivery.

Some delivery service companies, famously known as the third parties, have introduced their apps and they work in different countries and continents. Entities like Ubereats, Doordash, Postmates, GrubHub, etc., are working in a number of countries and grabbing a huge market share.

These companies make money by charging the respective restaurant a 30% standard commission. The customer is also charged a fee on the order summary.

The order is picked from the restaurant by the company’s rider and delivered to the customer. So, it ends up opening work opportunities for different people in different countries.

Delivery Apps

In 2020, DoorDash reigned over UberEats for the largest share of the food delivery market in the US. DoorDash grabbed 45% of the food delivery market, UberEats 22%, Grubhub 18%, and Postmates 8%.

The final bill may vary for different apps, even when ordering the same food. In such a scenario, the only way to stand out is through better products, services, fair pricing, and of course, creative promotions.

There’s constant competition between these companies to be at the top. They achieve their goals by giveaways, promos, and special discount deals on several occasions or through influencers. These marketing strategies can boost profitability and market leadership.

The innovative strategies may also include personalization according to the customer, one-tap order for frequently ordered items, finding restaurants according to budget, new ways of packaging to keep food hot, and small rewards in terms of credit.

New efficient companies have also emerged, such as Deliver Warm, which aims to provide similar services with transparent pricing, top-notch quality, and quicker delivery.

Ordering Directly From Restaurants

Going hand in hand with the world and fully utilizing the use of smartphones, restaurants have introduced their own apps that can be downloaded for IOS and android both.

The restaurants now provide two options. First, get the order delivered to your place. Second, to order beforehand and then pick up from the venue; this is similar to takeout but saves time.

Bigger names like Burger King and Chipotle are experimenting with the specific “lane” that is apparently more convenient for pick-up food quickly.

It is also reported that 62% of the revenue generated by restaurants is through online orders. A study by Square states that two-thirds of customers were more into ordering food through a restaurant’s own app instead of using a third-party app. And quite interestingly, 61% of them declared their preference for direct ordering to support their favorite restaurant.

So, third-party apps do have an overwhelming success, but restaurants with solid ground are still winning the game effortlessly.

Top Must-to-Know Facts About Food Delivery

What about some nuggets of interesting facts about food delivery services? Have a look:

  • Revenue from online platforms and apps is about 23% higher.
  • An average delivery time is 35 minutes, but about 27% of customers still say they are willing to pay more to get their orders quicker.
  • Recent food delivery statistics revealed that pizza delivery cost Americans $11 billion in only one year. Sounds unreal, right?
  • Gloria Food’s studyfound that 86% of Americans had ordered food delivery at least once a month.
  • The customers are more tempted to order pizza that is 18% larger than they would while dining Yes, all jaws are dropped!

Overall Growth Until Now And What Does The Future Hold?

Despite all the pros and cons, the convenience offered by the food services cannot be denied. Hence a downfall isn’t expected anytime soon.

The global food delivery service market reached a $106.1 billion valuation in 2021 and is expected to hit $223.7 billion by 2027.

Especially ever since the Covid-19 pandemic, customers have preferred getting their desired meal on the doorstep to going out and risking their health. This rapid increase in online orders is thus seen.

If we take DoorDash as example, it alone witnessed record 543 million orders that were massive as compared to 181 million orders placed before the pandemic.

Revenue in the Online Food Delivery sector is projected to reach around US$323.30bn in 2022 alone. At this pace, the number of users of food delivery is expected to amount to 2,613.2m users by 2027.

Summing Up

By now, we all know food deliveries have become a part of our lifestyle. And possibly, it will continue to be part of our lifestyle in years to come.

Also, food delivery services are quickly growing with more and more restaurants and cafes entering the big game. Customers also feel at ease having their favorite meal delivered at their doorstep.

So lay back, put on your favorite show, and order your comfort food. Bon Appétit!