Service indicators show signs of a slowdown in early 2022, posing a challenge to food delivery businesses (Current Issue No.3313)

Food delivery operators will tend to benefit from consumer behaviors during this period of high COVID-19 infections, wherein many businesses are still using a hybrid work model. At the same time, platform operators and restaurants continue to launch marketing campaigns and offer promotions to boost food delivery sales, while expanding their reach to new users. However, KResearch views that the food delivery business in 2022 will likely encounter increased challenges as signs  from early this year  indicate shifts in consumer behaviors in terms of frequency, prices and types of foods ordered. Looking ahead, the Russia-Ukraine war will likely aggravate impacts on food delivery operators.

Adjustment to food prices and delivery charges will likely be limited for operators in the industry amid soaring costs stemming from increased energy prices and raw material prices. Cautious spending and usage of food delivery applications by consumers  will tend to persist at least throughout 1H22, as ways of mitigating the rising cost of living. For this reason, there may be a slowdown in purchasing orders – especially for 1) restaurants that primarily sell beverages, dessert stores and bakeries; 2) restaurateurs that mainly offer dine-in services: BBQ, Sukiyaki/Shabu-Shabu and buffet restaurants; and 3) moderately priced to fine dining operators: Japanese restaurants, European eateries and steakhouses – partly because consumers are more inclined to have meals outside the home. At the same time, competition remains intense since online platforms still need to run marketing campaigns to motivate consumers and continually attract popular restaurants to their applications.

Based on the aforementioned challenges, KResearch projects that sales volume of food delivery business during 1H21 may show 19 percent growth due to last year’s low base, after enjoying strong growth in late 2021.