As reflected in the many stories that e27 had published last year, 2020 was a tough year for many industries –including F&B. One major change that took place during the time was that dine-in completely disappeared due to lockdown measures implemented in many countries, leaving restaurants with only takeout and delivery options.
According to a recent report by venture capital firm Momentum Works, food delivery in Southeast Asia (SEA) grew by 183 per cent in 2020 compared to 91 per cent in 2019.
A large part of this growth could be attributed to the fact that the lockdown prompted many in the region to download apps offering food delivery services, as the number of downloads increased 2-2.5 times in March and April. But, it is still unclear whether the demand actually translated into profit for the companies.
The report titled “Food Delivery Partners in Southeast Asia” also mentions that Grab contributed to close to half of the region’s food delivery GMV at an estimate of US$5.9 billion.
However, it is important to note that the report only covered orders placed through Grab, Foodpanda, gojek, Deliveroo, LineMan, Baemin, and Now between 2019 to 2020. So it might not reflect the overall performance of every food delivery platforms in the market.
Grab, which offers ride-hailing and financial services, leads in five out of six Southeast Asian markets in 2020 in terms of GMV, followed by foodpanda (US$2.52 billion) and gojek (US$2 billion).
While big restaurants seemed to have the opportunity to go digital, it also left behind a lot of smaller food stalls to fend for themselves. Grab aims to tackle this challenge by launching an initiative called Hawker Centre 2.0 pilot programme to imitate the experience of customers when they visit a hawker centre by delivering the same food to users at home.
But now as things are slowly getting back to normal after the deployment of COVID-19 vaccines, some experts predict that the F&B sector is bound to bounce back.
Aside from the positive news, the report also identified temporary stressors linked to the growth of food delivery apps in the future:
1. Increased commission levels for food delivery as a result of the increase in overall cost structure which was largely amplified when delivery options became the restaurants’ only source of revenue.
2. With unemployment rising, more displaced workers have turned to food delivery. This may have led to a drop in earnings per rider, creating friction between food delivery riders and operators.
3. The volume surge, coupled with the dispersal of orders (geographically from office to residential areas), puts the operational efficiency and unit economics of major food delivery platforms to test.
Strategies that food delivery players are taking
There are clear differences between the three key food delivery players, as stated by the report:
1. Since Grab is not just a food delivery platform and has a presence across a wide range of verticals such as payments, taxis, shopping and more, its strategy is to ultimately lower the cost of acquiring users.
2. Foodpanda’s user acquisition and market share strategy in SEA are based on heavy price promotions, as they clearly have a high growth expectation.
3. gojek, while still strong in Indonesia, is seeing declining market share in its home country. The efforts to expand outside
Indonesia since late 2018 has minimal impact, and their market share in food delivery is insignificant in Thailand and Vietnam.