The food delivery market has seen significant growth over the past five years. Led by platform-to-consumer services, such as DoorDash and Uber Eats, food delivery has expanded from takeaways to anything and everything, adding billions of dollars in potential revenue capture.
The network effects of more delivery riders, alongside route optimisations technologies, has enabled faster and cheaper delivery. This has created a flywheel effect for many of the food delivery operators, which continue to undercut competition on razor thin profit margins as they battle for market share.
The past few years has also seen more consolidation, as the larger businesses attempt to reduce the amount of competition in the market.
COVID-19 has propelled the industry a few years into the future, as millions of people in lockdown ordered food online for the first time. Grocery delivery service Instacart said it achieved its 2022 goals in the third week of lockdown.
While this surge in demand may cool off once we return to normality, food delivery operators expect it to have a somewhat lasting effect.
In this sector analysis, we will look into operations in the China, Europe, United States and United Kingdom. China, the US and the UK are the three largest individual countries for food delivery, Europe, primarily from Germany, Italy and Spain, is an emerging market which could surpass the US in a few years.
Table of Contents
Top Food Delivery Apps
Food delivery is a global industry, powered by the gig economy which has swept North America, Europe and Asia in the past decade. China’s food delivery apps have the largest userbase and market penetration, reaching over 650 million people, the US is the second largest market and the most well funded.
|Uber Eats||The most widely available food delivery service, active in six continents and first or second in gross orders in most countries|
|Just Eat||Leader of food delivery in the UK and active in Europe and Australia, also holds a stake in Brazilian food aggregator iFood|
|Grubhub||Original aggregator in the US and with Seamless, controlled over 50 percent of US online food delivery up until 2018|
|Takeaway.com||A European aggregator responsible (through subsidiaries) for most online food delivery in Germany, Netherlands and Belgium|
|DoorDash||The current leader in online food delivery in the US, which also pioneered the platform-to-consumer model|
|Postmates||A subsidiary of Uber Eats since 2019, responsible for about 10 percent of online food delivery in the United States|
|Deliveroo||The pioneer of platform-to-consumer in the UK, it now operates in 13 countries, competing with Uber and Just Eat|
|Delivery Hero||Through its many subsidiaries (including Food Panda), Delivery Hero has a controlling interest in food delivery platforms in over 40 countries|
|Ele.me||Owned by Alibaba, Ele.me is one of the two major food delivery platforms in China. It has over 200 million active users|
|Meituan Dianping||The other half of the online food delivery industry in China. Tencent is the largest stakeholder, with a 20 percent stake|
|Rappi||Backed by SoftBank, Rappi has aggressively pushed into the South American market, currently active in nine countries|
|Jumia Food||Part of the African e-commerce giant Jumia, which was the first African startup to be valued at over $1 billion|
|Damae-Can||Japan’s first choice for takeout, Damae-Can has over 20,000 restaurants and 2.3 million active users|
|iFood||Brazil’s most popular aggregator by a significant margin, accounting for over 70 percent of online takeaway orders in the country|
|Zomato||The most popular of the homegrown food delivery apps in India, which acquired Uber Eats India in January 2020|
|Yandex.Eda||As Uber is not active in Russia, Yandex.Eda has been given free reign to all of the platform-to-consumer market|
US Food Delivery App Market
The United States has one of the most competitive food delivery markets, with DoorDash, Grubhub and Uber Eats competing for first place. This intense competition has made it hard for any of the three major competitors to generate profits, which may become an issue as Uber and DoorDash are both on the US stock market.
US Food Delivery App Revenue
|Year||US Food Delivery Revenue|
Market revenue has increased 204 percent in the past five years, powered by the introduction of platform-to-customer services, such as DoorDash, Uber Eats and Postmates, which are able to provide a wider selection of restaurants and food types.
Projected US Food Delivery App Revenue
|Year||US Food Delivery Projected Revenue|
The introduction of platform-to-consumer apps to more second and third tier cities in the US will add more potential revenue capture in the next few years. The COVID-19 pandemic has already propelled the industry forward, although some restaurants and workers may leave the industry once we return to normality.
US Food Delivery App Users
|Year||US Food Delivery Users|
Usage has also increased in the past five years, although not at the same pace as revenue. Grubhub already commanded a large audience before 2015, customers have migrated to newer platforms.
US Food Delivery App Market Share
Sources: CNBC, McKinsey, Second Measure, Statista
As we discussed previously, the food delivery market has been propelled forward by platform-to-consumer businesses, such as DoorDash and Uber Eats. Grubhub was the leader and through its acquisition of Seamless held a strong lead over rivals, but in the past two years it has been overtaken.
UK Food Delivery App Market
In comparison to France, Italy and Spain, the UK has a far larger takeaway industry, responsible for approximately 40 percent of all European takeaway revenue. Two of the largest food delivery services, Just Eat and Deliveroo, are based in the UK.
UK Food Delivery App Revenue
|Year||UK Food Delivery Revenue|
Revenue has increased in the UK as well, as Uber Eats and Deliveroo fight it out for platform-to-consumer supremacy. To counteract the growing interest in fast food delivery, Just Eat recently introduced its own delivery service, which includes partnerships with McDonalds, Subway and Greggs.
UK Food Delivery App Users
|Year||UK Food Delivery Users|
Usage has grown at a steady rate, elevated by the COVID-19 pandemic, in which millions of users tried food delivery apps for the first time.
UK Food Delivery App Market Share
Sources: AHDB, Deloitte, Just Eat, Motley Fool
Just Eat has dominated the UK market and in 2018 acquired the second largest aggregator, Hungry House. Uber Eats and Deliveroo have both posed a challenge for Just Eat, which it is attempting to rise to with the introduction of its own delivery service.
Projected UK Food Delivery App Revenue
|Year||UK Food Delivery Projected Revenue|
The platform-to-consumer model will expand in the coming years, led by Just Eat’s new delivery service. Uber Eats and Deliveroo have already opened up their platforms to accommodate third-party deliveries, we may see new innovations from both to attempt to compete with Just Eat.
Europe Food Delivery App Market
The US and UK had a culture pre-internet of ordering takeaway, while many countries in Europe did not. This has held the market back a bit, although in the past five years Takeaway.com, Just Eat and local services have become more readily available.
Europe Food Delivery App Revenue
|Year||Europe Food Delivery Revenue|
In comparison to US and UK, Europe has not seen the same level of innovation or competition. This is partly due to the smaller market size, for comparison the UK takeaway industry was as large as Spain, Italy and France combined in 2017.
Aggregators still rule the market in Europe and there hasn’t been as large of a push to platform-to-consumer operators, although Uber and Deliveroo have launched in several European countries in the past few years.
Projected Europe Food Delivery App Revenue
|Year||Europe Food Delivery Projected Revenue|
The merger of Just Eat and Takeaway.com may lead to further investment in European countries which are still in the formative years of developing online food delivery services. There is a worry that some countries will see withdrawals, due to lack of sales and interest, as we have seen with Uber’s recent decision to leave Czech Republic, Romania and Ukraine.
Europe Food Delivery App Users
|Year||Europe Food Delivery Users|
The deployment of Deliveroo and Uber Eats in key EU countries – France, Spain and Italy – has pushed active users to 150 million. We expect regional services, such as Glovo and Wolt, to receive more backing, similar to Zomato in India and iFood in Brazil, improving competition and providing customers with more options.
Europe Food Delivery App Market Share
Sources: Deloitte, Dealroom, Pitchbook
Just Eat has held a commanding lead in Europe, as the lead aggregator in Spain, France, Italy and the UK. Uber Eats and Deliveroo both compete in the platform-to-consumer business, which Takeaway.com and Delivery Hero have adapted to slowly.
Consolidation of the European market, through the Just Eat-Takeaway.com merger, may stifle competition in the aggregation market. Delivery Hero, the main competitor in terms of size, appears more invested in Asian markets after selling off its German app to Takeaway.com.
Note: Just Eat and Takeaway.com merged in 2019 to form Just Eat Takeaway.
China Food Delivery App Market
From almost nothing a decade ago, China’s food delivery market has grown to be the largest in the world. Ele.me and Meituan Dianping, the two largest operators, control over 90 percent of all food deliveries in the country and have set up sophisticated platforms, which have far lower overhead than Western food delivery apps.
China Food Delivery App Revenue
|Year||China Food Delivery Revenue|
Alibaba’s Ele.me and Meituan Dianping are the two largest food delivery apps in the world, each generating over $7 billion in revenue. Currently, revenue per user is lower than in the US and UK, but we may see that disparity lessen in the next few years.
Projected China Food Delivery App Revenue
|Year||China Food Delivery Projected Revenue|
China Food Delivery App Users
|Year||China Food Delivery Users|
While revenues are impressive, China’s food delivery users stats are astounding, far surpassing any other region. By moving straight to mobile, the roadblocks Just Eat and Grubhub had to face in the early days were not an issue for Ele.me and Meituan Dianping, which have built very sophisticated food delivery platforms.
China Food Delivery App Market Share
Sources: Daxue Consulting, Forbes, TechNode
China’s food delivery market is a two way battle financed by the two largest tech companies in the country: Tencent and Alibaba. Alibaba acquired Ele.me in 2018, while Tencent is the largest shareholder in Meituan Dianping, with a 20 percent stake in the company.
Global Food Delivery App Market
In comparison to other internet-based markets, food delivery has only come to form in the past five years. The platform-to-consumer model relies on enough customers, restaurants and riders to fulfil a city, and without one of the three it struggles to function, as can be seen in small towns where there aren’t enough riders, so DoorDash and Deliveroo have had to open their platform to third-party delivery services.
Global Food Delivery App Revenue
Uber Eats, through the use of its global ridesharing platform, has been able to expand its platform-to-consumer business quickly. Just Eat Takeaway and Delivery Hero have amassed food delivery empires, through a growing list of subsidiaries.
Meituan Dianping, responsible for over 40 percent of China’s online food delivery, generated more revenue in 2019 than any of the Western apps.
Note: This graph does not include Ele.me, the other Chinese food delivery service. From market share alone, we gather Ele.me may be generating upwards of $7 billion in revenue.
Global Food Delivery App Funding
There have been peaks and troughs over the past five years, dictated by how investors feel about the industry overall. In 2016, worries about profitability reduced investment to its lowest level since 2011.
Consolidation of the market in the US and Europe and market maturity will lead to less funding in the West, although South America, Africa and Asia are still ripe for investment.
Projected Global Food Delivery App Value
|Year||Global Food Delivery Projected Value|
We expect the next five years to be filled with more global consolidation, although some markets (India, South Korea) have bucked the trend and supplanted multi-national services, such as Uber Eats and Delivery Hero, with home grown apps.
If US-China relations improve, we may see Alibaba, Tencent and Didi attempt to shift the balance of power in the West in their favour, through acquisitions or major investments, similar to SoftBank’s investments in Uber, Didi and Rappi.