Indian food-tech industry is set to become $ 4 billion market by 2020, according to a report by Redseer Consulting. The major factors which are responsible for the booming online delivery industry are changing consumer lifestyle, an increasing ratio of women in big corporates, young population and higher disposable incomes.

The initial rapid exponential growth of online food delivery industry has influenced many foreign investors to drift to this segment for the key marketplaces like Zomato and Swiggy.

The Indian online food delivery market is expected to grow at a CAGR (Compounded Annual Growth Rate) of 90% which is USD 4 billion by 2020.

The shape of the Indian market today

At present, the revenue generation by the key players is concentrated in few big cities. As per Redseer analysis, there are top 5 cities in India that contribute greater than 85% of the total orders volume. Banglore is leading the way having 32% shares followed by Delhi NCR with a share of 20%. According to the graph shown below, these 5 cities contributed approx 40% of the gross merchandise value of the Indian e-tailing industry as the whole.

However, emerging cities (tier 2 and tier 3) are trying to become major growth of avenue for the marketplaces like Zomato and Swiggy.

India v/s world

Though the online food delivery marketplace in India is rapidly growing, the penetration level when compared to the other major world economies is relatively small. India is still at a nascent stage with a 2 % of the share (online orders as a % of total no of delivery orders) in the global online delivery sector. On the other hand, developed market like United Kingdom has a share of 32%. China and the United States are drifting at about 11% and 13% respectively.

India being the fastest growing economy in the world, has more than just a long way to go in the online food ordering and delivery sector.

The opportunity: Understanding the new customer mindset!

With the pace that online delivery business is growing, customers expectations are also getting higher. They have become more adventurous in their food choices. The exposure to the International culture has motivated Indians to start experimenting with food. They are evolving their taste for different cuisines, apart from conventional Indian cuisine.

Last year, QSR industry witnessed growing at over 6% CAGR (Compounded Annual Growth Rate), and year 2019 seems even more brightening.

The growth of online food delivery industry presents a huge number of opportunities for a existing and upcoming restaurants to increase their business. Here’s how —

Cloud Kitchens

Cloud Kitchens (also known as Dark Kitchens), are delivery-only kitchens that solely provide online delivery services. These are fully equipped kitchens that don’t have a dine-in or takeaway option, which in turn, reduces the high rents required for the dine-in restaurants.

In India, there are many cloud kitchens like Faasos, Box8, Freshmenu and Biryani By Kilo having more than 10–20 outlets each which are expanding rapidly. These kitchens are trying to provide quality meals at affordable prices to the customers — all in the ease of consumers homes and offices.

Pickup and takeaway counters

There is an increasing demand for pickup and takeaway counters. It enables customers to either pick up their food from the place they ordered online, or have a food delivery agent to get it picked up for them. Having such options save an ample amount of time for those who are in hurry.

This particular opportunity is good for areas where there is a heavy-foot traffic like shopping malls and sidewalks. As there will be taking away of orders, it won’t disturb the turn-over of tables. So, it will add extra revenue together from the revenue of dining-in without even raising the operational cost much.

Food trucks

Nowdays, this large vehicle with food loaded in it is catching everyone’s attention. Food truck is the new evolution and is becoming one of the next opportunity in these days. It’s just like a restaurant on wheels.

A food truck can easily go where the customers are. It has pretty low overhead costs as compared to a restaurant, and requires a relatively low staff. Some of the popular food trucks include S.W.A.T, Mumbai Rolling Kitchen, The Lalit Food Truck Company etc.

An ingredient for the future!

As the GDP and disposable incomes are increasing, ordering food online isn’t luxury anymore. It has become a part of daily life.

With the rise in advancing technology, changing demographics, risks and opportunities, restaurants need to keep a primary focus on one key factor i.e. Innovation. Rather than being a first mover or a fast follower, it is more important to be agile and ready to move fast.