The online food delivery sector experienced unprecedented growth since the pandemic began. As lockdowns and quarantine regulations forced people to stay at home, the demand for grocery and meal delivery increased dramatically. The industry saw its revenues more than double compared to pre-pandemic levels in both the grocery and meal delivery segments.
In 2023,
food delivery revenues worldwide were estimated at just over one trillion U.S. dollars, of which 400 billion dollars were generated in the meal delivery segment. At the same time, the
user base of online food delivery platforms witnessed unabated growth in the past few years, with over three billion global consumers using some form of online food delivery service in 2024.
Global race for investments
In response to accelerating demand, online food delivery companies grew substantially during the pandemic and received record levels of investment. Big groups amassed
significant funding and acquired smaller players to expand operations across the globe. With nine billion U.S. dollars funding as of early 2023, Delivery Hero’s brand portfolio includes several successful regional players like Spain’s Glovo, Turkey’s Yemeksepeti and Talabat in the Middle East and North Africa. Other leading players in the industry like UberEats and DoorDash have also done their share of acquisitions in an effort to cement their position in the global online food delivery market. UberEats acquired Postmates in a deal worth 2.7 billion U.S. dollars, while DoorDash acquired Helsinki-based Wolt for a whooping eight billion, making it the second
most valuable e-commerce startup acquisition as of January 2024.
Faster than ever before
Food delivery services operate in a highly competitive business environment, and meeting
consumers’ expectations of delivery time is a big part of the battle. In a survey conducted in 2022, more than half of global consumers said they expected their online food orders to be delivered within a time window of 30 minutes or less. Long delivery time was reported to be the
top customer frustration with online food delivery for a third of respondents around the world. Faced with this, a whole group of startups emerged, promising consumers delivery of groceries and food products within an hour or less. These startups populated the so-called ‘
quick commerce’ market, with Getir, Gorillas, and Flink among the top players.
From boom to bust
The food delivery segment was not spared the repercussions of the global economic downturn that began in 2022 and continued well into 2023. Rising food inflation, supply chain disruptions and a full-fledged recession contributed to very challenging and uncertain macroeconomic conditions. As the global economy headed toward a recession, investment in the online food delivery industry slowed dramatically. In Europe for instance,
venture capital investment in food delivery decreased from a peak of 6.7 billion U.S dollars in 2021 to some 3.2 billion in 2022. In addition to funding drought, online food delivery companies struggled to maintain the high operating costs incurred during the height of the pandemic, and many of them resorted to
massive job cuts. As of January 2023,
U.S. market leader DoorDash had more than 1,200 terminations. Gopuff, in comparison, racked up some 2,300 layoffs.
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