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31 Mar 2023


Number of food delivery orders is set to decline, with an 8.0% YoY contraction seen in 1H23 (Current Issue No.3395)


        We at KResearch expect the number of food delivery orders in 2Q23 may shrink slightly from that reported in the previous quarter despite several supporting factors. These include a number of long public holidays, school break and the hybrid working mode that is still adopted by some organizations. As a result, the number of takeout orders may contract by roughly 8 percent YoY during 1H23, following exponential growth seen over the past few years. Although such contraction may reflect the saturation in the food delivery business to a certain extent, it is in fact a market correction, which does not reflect a gloomy outlook for all players in the food delivery market, in line with the prevailing context and consumer behavior,
        Despite the slowdown in takeout orders, restaurants may continue to enjoy additional sales at their premises because consumers have resumed dining out and thanks to the recovery in tourism. Given this, the overall turnover within the restaurant business will continue to grow. However, sales generated from food delivery will remain important, given the proliferation of new players and rising operating costs.  
        Meanwhile, the fact that many food delivery riders have switched to other jobs amid the recovery in the overall labor market has resulted in the decline in their number as compared to the number of takeout orders. This trend, however, should be a boon for existing riders in the system as the competition will likely ease.  
        The food delivery service providers may already have plans in place to cope with changes in the market, including their adjustment and diversification of business portfolios towards specific targets and/or other businesses such as marketing, advertising, tourism and finance.   
        KResearch is of the view that although food delivery remains imperative for both restaurants and consumers, maintaining an appropriate number of takeout orders and service quality, with the aim of offering the best value for money and bolstering profits still presents challenges for restaurants amid intense competition in the market.