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22 Jun 2022

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Food delivery business set to face more challenges from sagging demand and high energy costs after COVID-19 has eased (Current Issue No.3326)

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        It is expected that the food delivery business will face more challenges after the COVID-19 pandemic has eased. These include a gradual decline in the number of food delivery orders as people have begun to resume their normal life, plus the fact they may feel less inclined to order meals to eat at home amid murky  economic conditions, rising energy prices and cost of living. As a result, food delivery service providers and riders will be adversely affected as evidenced by a survey conducted by KResearch. The poll shows that most riders have been hurt by a decline in an average number of daily food delivery orders. Additionally, skyrocketing oil prices have prompted them to find new ways to cope with dwindling net income. For this reason, more than 70 percent of the respondents have accepted more orders to recoup their earnings.
        Problems being experienced by food delivery service providers are found in all businesses. The fragile economic recovery, elevated energy costs  along with soaring product prices in line with costs  have caused their sales to decline. To ease such impact, many online platform service providers have aligned their businesses with new markets such as courier and grocery delivery services in order to gain more opportunities in getting orders from food delivery service providers. Moreover, auto-assigned workflows, which are widely used globally, have been used to ensure that order assignments are efficiently distributed among riders.
        Looking ahead, cooperation between those in the food delivery supply chain is needed to mitigate current problems. For instance, restaurant operators may have to take an order immediately as soon as the meals have been prepared, or they must be more ready to deliver their meals to shorten the waiting time at their restaurants, or they may have to reduce the number of order cancellations during peak hours. Moreover, they may have to offer more opportunities for riders to get orders. Amid rising oil prices, online platform service providers may also have to be more flexible in their fee calculations as seen in the case of many online food delivery platforms abroad that have included a fuel surcharge in their fees when oil prices increase although they may eliminate it when oil prices decline.
        In 2022, we at KResearch are of the view that turnover in the food delivery business will grow 1.7-5.0 percent to approximately THB77-80 billion, against the 46.4 percent growth reported for 2021 amid more complex business challenges, increased competition and higher operating costs.

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