The global food delivery industry is experiencing explosive growth. The customers’ need for convenient, safe and contactless food ordering has skyrocketed in the past year with the pandemic and this has led to a rapid rise of the on-demand food delivery industry.
The market is, in fact, expected to grow by $44.23 billion by 2024, progressing at a CAGR of 7% during the period of 2020-2024, while the revenue from online food delivery industry is expected to show an annual growth rate (CAGR 2020-2024) of 9.5%, resulting in a market volume of US$13,233 million by 2024. Along with it, technologies like on-demand food delivery software are also seeing increased adoption as the online food delivery industry looks at keeping its demanding customers base satisfied.
Why Customers Love On-Demand Food Delivery Services
Delivery services allow customers to order meals from various restaurants as per their required time and desired location. Customers love these services mainly due to its usage convenience and accessibility. The applications used by these services enable clients to view menu, price and restaurant reviews before placing an order. With an assurance of timely and safety standards maintained delivery, on-demand food delivery services can fulfil customer expectations.
The on-demand food delivery services are able to retain relevant customer information to customize their ordering experience. Using this information, customers are enticed with offers, discounts and promotions to continue availing the services. Customers can choose their preferred method of payment for their food delivery. Ghost restaurants are restaurants that solely offer food through delivery and their focus is on preparation and fulfilling customers orders. Customers love the fact that their food needs can be fulfilled by clicking a few times on the delivery app and the order is delivered at your doorstep.
Popular On-Demand Food Delivery Apps in the USA, UK, Asia and Europe
With the advent of on-demand food delivery apps, getting breakfast, lunch and dinner delivered right at your doorstep—anytime, anywhere—is just a cakewalk now. Download the best delivery app available, select items, place an order and choose your payment mode—food delivery could never get any simpler. So, let us walk through some of the popular apps across the world:
USA is the second-largest market for food delivery apps, with revenue of around US $26.5 billion in the year 2020. The apps feature a combination of customer, restaurant and driver apps. Few of the major players are
- GrubHub: Online and mobile platform for pick-up and delivery of food orders
- Uber Eats: On-demand food ordering app, it is one of the most popular apps
- Postmates: Logistics, on-demand delivery platform and mobile app, it is well-known for its timely deliveries
UK has approximately 40 per cent of all European takeaway revenue amounting to around US$5.9 billion in the year 2020. Major players are:
- Just Eat: Food delivery and the takeaway app offers a wide selection of eating options, extremely fast delivery and excellent customer service
- Zomato: Restaurant review, guide and food delivery app, which caters food delivery and groceries.
- Deliveroo: Food delivery service is known for its fast delivery times and the consistency of service
With China having the largest food delivery app market in the world, Asia’s contribution is the biggest in this industry’s revenue. China’s food delivery revenue was about US $51.5 billion in the year 2020. Major players include Deliveroo, Uber Eats and Zomato, other players are:
- Ele.me: Ele.me means ‘Are you hungry’ in Chinese, is the largest food delivery service in China
- Food panda: Operates in 40+ countries. It is equally popular and present in Europe.
- Swiggy: One of the modern food delivery players that started its journey from Bengaluru, India.
Europe amounted to delivery revenue of US$18.9 billion in the year 2020. Just Eat, Deliveroo Uber Eats and Food Panda are some of the major players.
Key Problems that Weigh Down On-demand Food Delivery
With an increasing number of customers opting for on-demand food delivery services, the food industry is witnessing exponential growth. But as food delivery service deals with massive orders especially during meal hours and festival season, providing quality service becomes a challenge to most delivery providers.
10 Problems That The On-demand Food Delivery Industry Faces:
1. Shifting Customer Preferences
With countless delivery apps in the market, customer retention has become very difficult. The delivery service needs to understand likes and dislikes of the customer and offer incentives and offers based on preferences.
2. Fluctuating Market Prices
The need to offer competitive pricing puts great pressure on businesses dealing in delivery. Food prices keep fluctuating and it is not easy to keep track with market prices, which prevents in implementing the right pricing strategy.
3. Maintaining Food Quality Standards
It is a challenging task to maintain the quality of food being delivered at customers’ location. Food is always prone to quality lapse and implementation of proper logistics is crucial to provide timely deliveries.
4. Improper Food Handling
Lack of training in how to handle food delivery is one of the reasons for improper handling. Delivery services need to have proper measures in place to ensure proper hygiene and safety standards are maintained.
5. Big Industry Players
With the on-demand food delivery showing great growth, big industry players having immense resources have been able to take a bigger market share. For small players, it becomes very difficult to gain a customer base.
6. The Logistics Dilemma
Businesses dealing with food need to take into account various parameters like what will be the delivery coverage area, how to maintain quality, freshness for far-off locations, allocation of resources like manpower, fleet and so on. An absence of proper logistics management would lead to customer dissatisfaction and loss of orders.
7. Unreliable Delivery
Unreliable delivery can be because of reasons like traffic, order volume, lack of training, and lack of proper scheduling and route planning. The food delivery can be unreliable if there is a shortage of delivery staff.
8. Inability to Cope With Demand
Inability to cope with demand leads to increased delivery times and compromises quality. Accept orders keeping in mind your resources and ability to deliver on time. Most restaurants cannot manage operations and logistics for delivering a large number of orders.
9. Payment Methods
Lack of multiple payment methods would lead to customers cancelling their orders and switching to another delivery service. Refund process in cases of failed payments or cancelled orders also needs to be implemented.
10. Customer Service
On-demand food delivery services need to provide different channels of communication like email, live chats, social media and phone calls to customers. Customers prefer to be kept in the loop regarding the status of their food delivery order.
How Cloud Kitchens are Driving Global On-Demand Food Delivery Industry
Cloud kitchens are commercial facilities, which are exclusively built to produce food specifically for delivery. They are sometimes also known as shared kitchens, ghost kitchens and virtual kitchens. Cloud kitchens are delivery-only restaurants that exist in the digital realm on their websites or as listings in on-demand delivery food services. The menu items are optimized for ease of production and reliability of food quality upon delivery. This move to a delivery-only model has been made possible due to advances in technology and changes in consumer behaviour. Cloud kitchens are tech-enabled and hence able to take full advantage of delivery apps to optimize delivery.
Major factors driving the growth of cloud kitchen market size are an increase in on-demand food delivery, an increase in demand for international cuisine and the embracing of technology-driven ordering systems. The use of cloud kitchens by grocery stores, restaurant brands and multi-branded restaurants has provided an added thrust for the growth of the cloud kitchen market.
Low overheads, better efficiency, access to user data and real-time adaptability, digital brand awareness without high marketing spend using delivery apps are some of the benefits of investing in cloud kitchens for businesses. With the global kitchen market size valued at US $43.1 billion in 2019 and estimated to reach US$71.4 billion by 2027, Cloud kitchens are driving the food delivery industry.
Why is On-Demand Food Delivery Software Critical for Food Delivery Industry?
On-demand food delivery software will be able to streamline the entire process beginning from displaying your menu up to delivering it to the customer and receiving the payment. This software will be able to make your food business easily accessible to customers, increase revenue and customer base. The main role of delivery software is to match the demand and supply quickly and cost-effectively.
Here are the main features that make on-demand food delivery software so important for this industry.
Real-Time Dynamic Routing
Real-time dynamic routing adjusts routes to leverage every optimization opportunity to avoid any unforeseen obstacles. This feature helps to make deliveries profitable by reducing empty miles and mapping fuel-efficient and multi-drop delivery routes.
Accurate and timely estimations of the arrival time of food delivery are important to ensure the enhanced customer experience. The software uses algorithms to analyze data and predict the Estimated Time of Arrival to the customer.
Improved Customer Service
An on-demand food delivery app can improve customer services through features like customer support, chatbot and order tracking features. Offer special promotions and freebies to enhance customer experience. The more flexibility you provide to customers, the more likely that they will come back for repeat orders.
Reduced Operational Costs
The software can assist to reduce overheads and operational costs by simplifying complexities and bringing automation. By automating route planning, order management, tracking of orders through advanced analytics and algorithms would be able to optimize the delivery service.
Automatic scheduling of orders is a required feature to facilitate proper allocation of orders to delivery personnel based on delivery location proximity and turnaround time.
Multi-Drop Food Delivery
Making multiple deliveries allows for utilizing a single delivery to handle more customers at the same time. It not only increases revenue but also saves time to make another delivery run.
Electronic Proof of Delivery
When a food delivery has reached its destination, it still needs to be accounted for. Proof of delivery completes the chain of custody and ensures that the order has been delivered to the correct customer. Electronic proof of delivery in lieu of traditional paper is quicker, accurate and easier to keep records of orders.
Payments need to be simple and secure. By incorporating all payment gateways or mobile wallet app services, you are providing a wide range of choices to customers and also promoting cashless transactions.
Tracking in Real-Time
Customers would not only able to track the delivery process in real-time but can also get the correct time estimate for the delivery. The software would also be able to keep track of the preparation of meals too. By providing step-by-step tracking customers feel that they are being taken care with utmost priority.
Gamification uses real-time data to display last-mile KPIs using leaderboards, measuring performance, earning rewards and many more. Gamification helps to improve major last-mile KPIs like on-time delivery rate, number of orders completed, capacity utilization, customer satisfaction and other such parameters. It helps to increase employee engagement and productivity.
The constantly rising interest of consumers in ordering food online is driving this market. It would be very wise to consider investing in a delivery software to boost return on investment (ROI).
How FarEye's On-Demand Food Delivery Software Can Help Food Chains
FarEye, a SaaS-based real-time visibility platform, helps food chains to create, orchestrate and control on-demand food delivery operations. FarEye’s predictive logistics software enables food chains to win in a customer-centric era by enabling an exceptional delivery experience.
The On-Demand and Hyperlocal delivery software of FarEye provides the right technology to handle demand fluidity for perishables like food and grocery. Some of the tools provided by FarEye’s on-demand food delivery software are:
- Delivery scheduling
- Order broadcasting
- Driver crowdsourcing
- Real-time dynamic routing
- Service point deliveries
- ETA visibility
- Digital payments
- Contactless deliveries
- Performance Management With Gamification
For a food chain looking to deliver on-demand, FarEye is the best solution to connect with customers and meet their demands on time.