A study on

Indian Online Food Delivery Market and Over View

Summer Internship Project Report

Submitted to

AURORA’S BUSINESS SCHOOL

In partial fulfillment of the requirements for the award of

Post Graduate Diploma in Management (PGDM)

by

ANVESH CHINTAKULA

DM-16-150

2020-22

Aurora’s Business School,

Near NIMS, Punjagutta, Hyderabad. - 500 082
Tel: 040 2335 1891/92, 2335 0061/62 URL: www.absi.edu.in e-mail us:
info@absi.edu.in
November, 2021
 AURORA’S BUSINESS SCHOOL
___________________________________________________________________

Date:
Place: Hyderabad

Certificate

This is to certify that the research work embodies in the present thesis entitled as “India
Online Food Delivery Market: Industry Trends, Share, Size, Growth &
Opportunity” has been carried out by Mr. Ch. Anvesh, Roll No: DM-16-150 under my
supervision, for a period of thirty days as a part of Summer Internship Project (SIP) of
the Post Graduate Diploma in Management (PGDM) of the Aurora’s Business School.

I hereby declare that to the best of my knowledge that no part of this thesis has been
submitted earlier for the award of Degree at any other Institute or University.

Supervisor SIP Co-Ordinator Director

Aurora’s Business School,

Near NIMS, Punjagutta, Hyderabad. - 500 082
Tel: 040 2335 1891/92, 2335 0061/62 URL: www.absi.edu.in e-mail us: info@absi.edu.in
 Date:
Place: Hyderabad

DECLARATION
I hereby declare that the project research embodied in the present thesis entitled “India Online
Food Delivery Market: Industry Trends, Share, Size, Growth & Opportunity”, is an original
research work carried out by me under the supervision of Prof. C. Kameswary, Faculty, Aurora’s
Business School in partial fulfillment of the requirement for the award of the degree of Post
Graduate Diploma in Management.

I declare that to the best of my knowledge that this thesis or a part of thereof has not been earlier
submitted for the award of degree at any another Institute or University.

Signature of the Candidate

Ch. Anvesh
DM-16-150
Batch
2020-22
 ACKNOWLEDGEMENTS

I would like to thank everyone who is involved in helping me in producing this

project report by bringing out creativeness in this project.

I would like to take this opportunity to thank my Project guide Prof. C.

Kameswary, Faculty, Aurora’s Business School, for her undeterred guidance for the
completion of the report.

My parents need special mention here for their constant support and love in my
life. I also thank my friends and well-wishers who have provided their whole hearted
support to me in this exercise. I believe that this effort has prepared me for taking up new
challenging opportunities in future.

Ch. Anvesh
DM-16-150
 ABSTRACT
This report explores the three key elements of the food service delivery
value chain: aggregators, cloud kitchen operators and restaurants that also deliver.
The report is intended to achieve two clear objectives are to define and
measure the food service delivery market and the various segments within it and to
highlight the trends and drivers and to use them to provide a framework for thinking about
the future of the market.
The report also draws comparisons with select international markets to provide a wider
global context to the potential evolution of the food service delivery market in India.
Online food ordering has been a very emerging sector globally and also a
recent phenomenon in India. The development and the availability of the internet
combined with the busy life schedule has prompted businesses to address another need
among consumers, the need to deliver foods at consumers’ doorsteps. Understanding the
consumer landscape better would help realize the full potential of the e-commerce
platform as it can influence the economy, businesses and the quality of life of people.
The online food delivery business is new and growing and demands
greater researches for better understanding by academicians and practitioners. This paper
expands the limited existing research related to the online food delivery business and
explores consumer behavior in the industry. From a managerial perspective, the paper
contributes to understanding the consumers more broadly.
Keywords: Online food delivery, Consumer behavior, E-commerce, Online retailing,
Cloud Kitchen.
 TABLE OF CONTENTS
CHAPTERS PAGE N0

1. INTRODUCTION
1.1 The industry overview…………………………………………………...1
1.2 Food delivery service and how it works....................................................2
1.3 Food delivery service importance………………………….….….……...4
1.3.1 wider variety.............................……….……………………………….4

1.3.2 Cost efficiency for customers……………………………………….…4

1.3.3 Easily Accessible...………………………………………..........……...4
1.3.4 Varied modes of payment...................…………………………………5
1.4 Conceptual Discussion...............................................................................5
1.4.1 The Food Delivery Business Model........................................................5
1.4.2 Food Delivery Business Model Examples..............................................5
1.5 Platform to Consumer Model.....................................................................6
1.6 Delivery Service Aggregators....................................................................6
1.7 Full-Stack Model........................................................................................7
1.8 Restaurant to Consumer Model..................................................................7
1.9 Case study ...........................................................…………………….......8
1.9.1 Zomato’s motive behind the acquisition of uber eats….…………….....9
1.9.2 why uber agreed to sell…………………….................................….......9
1.9.3 Deal will affect the customers, employees and restaurant.………….... 10

1.9.4 Zomato and Uber Eats agreed to go for stock acquisition………...…...10

1.10 Mistakes made by Uber Eats...........……………………….....................10
1.11 Issue of shares for consideration other than cash………………….........12
1.12 Determination of purchase price…………………..................................12
1.13 On the basis of the amount payable…………………………….…........12
1.14 On the basis of the number of shares.......................................................12
1.15 On the basis of assets and liabilities.........................................................12
1.16 Issue of shares for purchase of assets.......................................................13
1.17 Issue of shares for consideration as per Companies Act..........................13
1.18 Issue of shares for consideration under FDI consolidation......................13
1.19 Steps required for government approval..................................................13
1.20 Issue of share in pre corporation expenses...............................................14

2. REVIEW OF LITERATURE & RESEARCH METHODOLOGY

2. Review of literature......................................................................................(16 - 22)
2.4.1 Need Objectives and Scope ....................................................................22

2.5 Tools proposed to be used………………………………………..............23

2.6 Objectives of the Study……………………………………………….….23
2.7 Scope and limitations of the study…………………………………….…23
2.8 Data Sources……………………………………………………………...23
2.9 Secondary Data…………………………………………………………...23

3. INDUSTRY PROFILE
3. Industry profile.............................................................................................25
3.1 Here are the factors driving the Indian food delivery sector......................26
3.1.1 Indian Food Delivery: Business Model...................................................26
3.1.2 Indian Food Delivery: Potential Customers............................................26
3.1.3 Indian Food Delivery: Retention Offers..................................................27
3.1.4 Indian Food Delivery: Looking to a Post-COVID-19 World..................27
3.2 Food Delivery Business Model – Pros and Cons.......................................28
3.3 Food Delivery Business Model – Advantages...........................................28
3.4 No legal commitment to drivers.................................................................29
3.5 Food Delivery Business Model – Disadvantages.......................................29
3.6 Essential Metrics & KPIs...........................................................................29
3.7 Platform KPIs.............................................................................................29
3.8 Total Amount of Orders.............................................................................30
3.9 Average Number of Deliveries/Orders Per Hour.......................................30
3.10 Average Profit Per Delivery.....................................................................30
3.11 Driver & Restaurant KPIs.........................................................................31
3.12Average Order Duration............................................................................31
3.13 Percentage of Driver Is on Order / Idle....................................................31
3.14 Number of Support Tickets......................................................................32
3.15 Customer KPIs.........................................................................................32
3.16 Churn Rate...............................................................................................32

3.17 Customer Lifetime Value (CLV).............................................................33

3.18 Net Promoter Score (NPS).......................................................................34
3.19 Market dynamics and segments...............................................................34
3.20 covid is changing the industry..................................................................35
3.21 Future growth of the market.....................................................................36
3.22 Factors that will influence the growth of foodservice delivery in India...37
3.23 Key Food Delivery Challenges.................................................................37

4. ANALYSIS & INTERPRETATIONS OF DATA

4.Analysis & Interpretations of Data................................................................(40 - 48)

5. FINDINGS, CONCLUSIONS & SUGGESTIONS

5.1 Conclusion.………………………………………………………………. (50 - 51)
5.2 Suggestions..................................................................................................(52 - 53)

BIBLIOGRAPHY
 Chapter – Ⅰ
Introduction
1. Introduction
The market is currently witnessing growth on account of the increasing access to high-
speed internet facilities and the boosting sales of smartphones. This, in confluence with
the growing working population and inflating income levels, is propelling the online food
delivery market growth in India. Although the players are mainly concentrated in the
urban regions of the country, with Bangalore, Delhi and Mumbai representing the three
largest markets, vendors are now also targeting smaller cities, as they have strong growth
potential. Moreover, the rising trend of the on-the-go food items and quick home delivery
models that offer convenience, ready-to-eat (RTE) and cheaper food delivery options are
escalating the demand for online food delivery services in the country. Furthermore,
owing to the rising cases of COVID-19, some of the leading players like Zomato,
McDonald's Corporation and Domino’s Pizza Inc. have introduced contactless delivery
services. These services ensure that the food reaches the customer without being touched
by bare hands and is delivered safely with adequate social distancing measures.

1.1 The industry overviews

Then came in applications like Zomato who reversed the whole scenario and made it
extremely simple for the consumers. Deepinder Goyal and Pankaj Chaddah founded
Zomato in 2008 that further aided this process of eating out and food delivery.

Zomato hits a valuation of $5.4 Billion on February 22, 2021, after its recent funding
round on the same date led by Kora, Fidelity, Tiger Global Management, and others for
$250 Million.

Swiggy is India's largest online food ordering and delivery platform. Founded in July
2014, Swiggy is based in Bangalore, and operates in 500 Indian cities, as of September
2021.

The global online food delivery market, estimated to be about USD 113 billion in 2020,
is one of the few industries which is growing at a double-digit compounded annual growth
rate (CAGR). In India alone, the online food delivery market was worth around USD 4.66
billion in 2020 and is one of the fastest-growing sectors, attracting a lot of heavy
investments. Compared to the year before, the market size was around USD 2.9 billion.
By 2026, the industry is forecasted to be worth USD 21.41 billion, with a staggering
CAGR of 28.95% during 2020–2026.

1
One factor propelling the accelerated growth of India’s online food delivery market is the
changing lifestyle and eating habits of its local population. Hectic schedules compounded
by growing disposable income levels in India are pushing people towards ready-to-eat
food available at a cheaper rate. The one-click, on-demand feature has popularized food
delivery options among busy urbanites. Rising digitalization among millennials, an
increasing proportion of working women, and the prevalence of double-income families
who prefer eating out have driven online food delivery trends in India.

Finally, the COVID-19 lockdowns have indubitably impacted the industry. Interestingly
enough, while the impact has been negative at first, post lockdown, we witnessed some
interesting trends such as order volumes surpassing pre-COVID-19 volumes of last year
and the propensity to choose online payment methods instead of cash.

Thanks to the food delivery apps, you can now get your favourite burger delivered to your
doorstep from your choice of restaurant in town. Online food delivery platforms are
expanding choice and convenience along with great deals and discounts, allowing
customers to order from a wide array of restaurants with a single tap of their mobile
phone. As a result, the food delivery business is fast catching up across markets of
America, Asia, Europe, and the Middle East.

According to “Online Food Delivery Services Global Market Report 2020-30”, the global
online food delivery services market is expected to grow from USD111.32 billion in 2020
at a growth rate of 3.61%. However, 2020’s growth slump is mainly due to the economic
slowdown across countries owing to the pandemic outbreak and the measures to contain
it. The market is still expected to grow and reach USD154.34 billion in 2023 at CAGR of
11.51%.

The food delivery market in the US is mainly driven by a hectic work schedule and high-
income levels of professionals who hardly get time to prepare their meals at home. As per
Statista, online food delivery segment’s revenue is projected to reach USD 28.48 billion
in 2021 with an annual growth rate of 4.3% (CAGR 2021-2024). At a global level, China
will generate almost USD 56.93 billion in revenue, that almost double that of the USA.

1.2 Food delivery service and how it works

Food delivery has now become an integral part of the urban lifestyle. And that’s why
almost the entire day those delivery agents can be seen riding their bikes, carrying the
orders, sporting their company T-shirt and a cap. It is observed that one-third of
Americans order food online at least twice a week.

2
Food delivery service is somewhat similar to courier service in which the ordered food is
delivered from the restaurant to the customer either by the restaurant’s staff or by delivery
agents of a food ordering company. This obviously depends on the medium through
which a customer places his/her order. Orders can be placed over a call, mobile apps and
through web-portals of a restaurant directly, or through restaurant aggregator apps. Often
a flat delivery fee is charged to the customer and at times even that is waived off,
depending on the order volume. Post pandemic outbreak, contactless delivery has come
into practice nowadays. Food delivery service might also include delivering groceries
from the supermarket. Technological interventions have further made food delivery
services prompt and quick, keeping customers happy and loyal.

Food delivery businesses follow several models, depending on the objective it varies from
company to company. But the priority is to deliver freshly prepared food faster and safer.
Given below are a few popular models of food delivery services that are in practice.

1) Platform to Customer Model

In this model, third-party apps throw up a list of available restaurants in close proximity
to the customer’s location. Customers are free to order from these partner restaurants and
get the food delivered either by the restaurant or a delivery agent of the platform. Apps
such as DoorDash, UberEats, and Deliveroo are perfect examples that follow this delivery
model. Generally, these platforms take a 20-30% cut from the order value on the top
potential delivery cost that may arise. This mode of food delivery business accounts for
almost half of the $122 billion that is generated in sales per year.

2) Aggregators

This model can be classified as one of the types from the previous model, however, it is
worth mentioning separately. A delivery service aggregator acts as an intermediary
between a customer and several local restaurants. Additionally, they offer customer
support on behalf of the restaurants in case there’s an issue with the delivery or the order.
JustEat, Delivery Hero, and GrubHub are some of the existing players. These platforms
charge a fixed fee on every successful transaction facilitated or even prompts for a
monthly subscription.

3) Full-Stack Model

In this scenario, the food delivery business does everything all by themselves. Right from
developing the app to hiring delivery staffs and cooking the food in-house, every

3
operation is carried out `by them. Mostly the food is prepared in cloud kitchens, where
dining facility isn’t there. However, this model needs substantial investments to launch
the platform. On the contrary, once sufficient scale is achieved, full-stack food delivery
platforms eventually earn more as they control the whole value chain. They can control
the food quality as everything is cooked in-house.

4) Restaurant to Consumer Model

McD, BurgerKing, and Domino’s are some of the biggest examples of this business
model. These companies offer food deliveries to their customers through their websites
or app to certain specific regions. And through partners like DoorDash, Zomato to deliver
food to regions where they don’t serve themselves.

1.3 Food delivery service importance

Current lifestyle and pace of life have made it a bit difficult for double-income households
to cook a proper meal. Also, the lack of time due to a hectic office schedule further makes
it impossible to go out for dinner and lunch. And in this kind of scenario only food
delivery services can be a true saviour. During the lockdown, it has been a boon to many
to get food delivered at their doorsteps. Some of the advantages of food delivery service
are listed below.

1.3.1 Wider Variety

Food delivery service gives a plethora of options to choose from at the comfort of your
home. You can choose your favourite cuisine from a wide range of restaurants. Be it an
appetizer, main course or desserts, be it Chinese or Italian or Indian, you get to choose
them easily. You can also compare the prices and popularity rating of the restaurants
before ordering. It is easy to order and the transparency in the transaction also acts
advantageously.

1.3.2 Cost efficiency for Customers

It is cost-effective to order food, the reason is that you cut on your travelling expense and
time. Moreover, you can avail the deals and discounts that further reduce the expenses.
As compared to dining-out, calling in for food at home is more affordable.

1.3.3 Easily Accessible

Just a smartphone with Android or iOS is needed that supports the app. Rest all is just a
click away. Tutorial videos are also available to enable you to get a hang of things.

4
1.3.4 Varied Modes of Payment: Making a payment is quite convenient while placing
an order for food delivery services. You get a choice of paying either by cards, net-
banking, digital wallets, or even by COD (cash on delivery). The payment gateways are
secured with valid certification and hence is safe to use.

1.4 CONCEPT DISCUSSION

1.4.1 The Food Delivery Business Model
Food delivery has become an integral part of our lives. One third of all Americans say
that they order food online at least twice per week. By 2023, the worldwide market for
online food delivery is projected to hit $137 billion.

Food delivery is a courier service in which stores, restaurants, or third-party applications

delivers food to consumers on demand. These days, orders are executed through mobile
apps, websites or via telephone.

Deliveries include cooked dishes as well as groceries from supermarkets. Other methods
of food delivery include catering or wholesale.

The first recorded instance of a meal delivery comes from Italy in 1889. King Umberto
and his Queen Margherita and called Raffaele Esposito, the creator of the Pizza
Margherita, to deliver a pizza to their palace in Naples.

The rise of the modern-day food delivery system was caused by economic necessity.
During the 1950’s, the growing American middle class was stuck to their homes,
watching TV all day. This almost caused a collapse in the American restaurant industry
and as a result had them adapt by creating the modern-day delivery services we all know.
Reports from that time indicate that this adaptation boosted restaurant sales by over 50
percent in a short period of time.

Today, the market for food delivery is valued at $122 billion. This is equal to 1 percent
of the global food market or 4 percent of the food sold through restaurants. While many
markets have already matured and identified companies to take on market leadership, the
overall demand for food delivery is still increasing at a yearly rate of 3.5 percent.

1.4.2 Food Delivery Business Model Examples

Food delivery businesses come in many shapes and forms. They range from platform that
partner up with restaurants and drivers to a fully integrated model where everything is
kept in-house.

5
1.5 Platform to Consumer Model

In the Platform to Consumer Model, third-party apps are listing available restaurants close
to the customer’s proximity, normally through a website or a mobile app.

Consumers can then order from these partner restaurants and have the food delivered
either by the restaurant or a driver of the platform. Prominent examples include the likes
of DoorDash, UberEats, Zomato, Swiggy, Deliveroo.

Normally, the platform takes a 20 to 30 percent cut from the order value on top potential
delivery cost that may arise.

1.6 Delivery Service Aggregators

Although they technically fall under the Platform to Consumer umbrella, it is worth
mentioning them separately. In the aggregator model, the platform works acts as an
intermediate between a customer and numerous local restaurants.

Furthermore, they provide customer support on behalf of these restaurants in case there
are problems with deliveries or the order itself.

Again, a fixed or variable fee is applied for every successful transaction facilitated
through the platform. Examples include the likes of JustEat, Delivery Hero or GrubHub.

Some have recently experiment with different subscription models in which customers
pay a monthly fee in exchange for free delivery and other discounts.

6
1.7 Full-Stack Model

In the Full-Stack Model, the food delivery business does everything in-house. This
includes not only building the app or hiring drivers, but also cooking the food.

Oftentimes, the food is prepared in so-called ghost or cloud kitchens. People cannot dine
in these facilities as the primary purpose is to prepare food that is delivered. These cloud
kitchens often allow allocating the creation of food in cheaper areas while only renting
out space for the kitchen.

One of the major drawbacks of this model is the fact that substantial investments are
required to launch the platform. On the other hand, once sufficient scale is achieved, full-
stack food delivery platforms tend to earn more as they control the whole value chain.
They furthermore can-do better-quality control of their food as everything is cooked in-
house.

1.8 Restaurant to Consumer Model

In the Restaurant to Consumer Model, the restaurant started out serving food via its own
locations. The most famous examples include the likes of McDonalds, Burger King or
Domino’s.

To modernize, these companies went on to offer food deliveries via their websites, app
or join a delivery platform. For instance, McDonalds operates its own food delivery
network in selected countries via its own app. Furthermore, it partners up with the likes
of DoorDash to deliver food to regions they don’t serve themselves.

Domino’s became a poster child in leading the food delivery movement. Some of the
company’s innovations in the space include:

A voice recognition system (named Dom) to place orders

An app to track delivery on route

Experimenting with drones for automated delivery and many more. These initiatives
certainly panned out well for the pizza franchise. By 2017, Domino’s overtook Pizza Hut
as the world’s most valuable pizza chain. Furthermore, the company’s share price jumped
from $11 in 2010 to over $351 in 2020.

7
1.9 Case study of Acquisition by Zomato of Uber Eats: Analysis

Brief History of Zomato and Uber Eats

UberEats parent company was founded in 2009 by Garret Camp and Travis Kalanick.
The company started its food delivery in August 2014 with the launch of UberFRESH in
California. The platform was renamed as UberEats which started its operation in London
in the year 2016. In August 2018, UberEats started its delivery fees depending on the
range or distance of the order placed. In the UK and Ireland, the delivery fees are based
on the value of the order. In November 2019, UberEats announced that it will deliver the
food through drones by summer of 2019. On January 21 Zomatoo acquired UberEats in
the all-stock acquisition, with UberEats gaining 9.99 per cent stake in Zomato.

Zomato is an Indian restaurant and food delivery startup founded in the year 2008 by
Deepinder Goyal. Zomato offers its services in 24 countries and in 10,000 cities. In 2011,
Zomato expanded its delivery across India in Delhi NCR, Mumbai, Banglore, Chennai,
Pune, Kolkata etc.

Zomato has acquired 12 startups globally. In July 2014 Zomato acquired the startup Menu
Menia. Zomato acquired Tongue stun in September 2018, a Bengaluru startup, for cash
and stock deal of 18 million dollars. Zomato also acquired Tech Angle startup in
Lucknow that worked on drones.

8
Zomato acquired stocks of UberEats for a deal value of 350 million dollars on 21st
January 2020.

1.9.1 Zomato’s motive behind the acquisition of Uber Eats

Ø Large acquirers acquire a smaller company so as to provide speedy and efficient

services at a lower cost. Zomato is a larger organisation than Uber Eats and both
operated in the same line of business but Uber was not able to influence the market.
Ø This will help Zomato gain competitive benefits from Swiggy as the combination of
Zomato with Uber Eats will help increase its share to more than 50 per cent of the
market, pulling it ahead of Swiggy.
Ø Zomato will also have greater negotiating power with restaurants which will reduce
the losses.
Ø The discussion was going with the soft bank to consider Swiggy as Food Tech or Food
Hub but now, after the acquisition of Uber Eats by Zomato, Zomato will become the
Food Tech or Food Hub in the food market.

1.9.2 Why Uber agreed to sell

Uber was running in loss for a few years and its CEO Dara Khosrawasahi said that the
company will only operate in the market where it will be in the No. 1 position whereas,
Zomato and Swiggy were ahead of UberEats in India, which is why we sold it to Zomato.
It has pulled back its business from Vienna and South Korea because it was running in
losses and it was not in number 1 position.
Uber was a competitor of Swiggy and Zomato which already have well-established
market relations with local restaurants and they are able to respond quickly to changes in
the market such as technological change, etc.

9
As per industry estimates, UberEats has 5 per cent of overall global booking in online
bookings for food delivery. In December 2019 UberEats made a huge loss of 107 million
dollars.
The deal also gives Uber 9.99 per cent of ownership in Zomato which will be valued at 3
billion dollars. This deal will give Uber a chance to recover at least the initial investment
in India. Moreover, the purchase price that is given by Zomato in buying UberEats can
be used by UberEats in growing other businesses.

1.9.3 Deal will affect the customers, employees and restaurants

Swiggy and Zomato will try to attract the customers after the acquisition of Uber Eat with
discounts, offers and subsidies and this will be their ongoing strategy. Restaurants who
are already with Zomato will give a gold offer to their customers such as dining out and
delivery. But restaurants will lose their bargaining power. Also, 100 employees will be
reallocated or laid off due to acquisition.

1.9.4 Zomato and Uber Eats agreed to go for stock acquisition

This type of acquisition involves the purchase of a business or acquiring a business by
giving them shares. Zomato agreed to give 10 per cent of shares to Uber Eats and acquired
100 per cent of stocks. In this type of acquisition, the acquirer assumes all liabilities and
assets of the business and the buyer can also contractually allocate the liabilities. The cost
of acquisition in case of stock acquisition or stock deal is inexpensive and easy to execute.
Also, no tax is deductible on goodwill.

1.10 Mistakes made by Uber Eats

1.Increasing the frequency of audience
UberEats recognises Alia Bhatt as its brand Ambassador. It is the only food delivery app
which brings celebrities in its communication. In January 2019, it launched a campaign
called Everyday Moments. This was the largest viewed video on Youtube; around 50.3
million Indians watched this on Youtube.
2. Late mover disadvantage
One of the main reasons for the failure of UberEats was that it could not do proper
research on the need for people. To create a distinct identity, UberEats should have
followed the discounting strategy and other policies for its customers to acquire and retain
them. In this way, UberEats could have gained more views from its customers.

10
3. Developing a distinct identity
Uber should have developed a distinct identity from others in its food delivery system
and it should have introduced various discounts and allowances in its food. If this would
have been done by UberEats then the situation of selling themselves to Zomato would not
have occurred.
The all-stock deal between Zomato and Uber Eats and how it is different from the
all-cash deal
The terms ‘all-cash’ and ‘all-stock deal’ is used in the transaction of merger and
acquisition. The difference between merger and acquisition is that in a merger, a merger
company merge with each other and in the acquisition, one company acquires another
company. In the merger, the companies merge with each other and a new company is
formed and, in the acquisition, the acquiring company starts working in the name of the
acquired company. Such deals can occur in either all-cash basis or all stock basis.
All-cash basis basically involves the purchase of the company from cash. In an all-cash
deal, the equity portion of the balance sheet of the parent company remains unchanged.
But in an all-stock deal, the equity portion of the balance sheet gets affected. All-cash
merger and acquisition deals are those which occur without any exchange of stock or
equity and this is because trading happens when the trading company purchases shares of
the other company in cash. This type of situation arises when the company acquires an
even larger company that has a large amount of cash, so the financial situation of the
companies does not get directly affected. However, the cash deal method has a lot of
drawbacks as there are a lot of tax deductions.
Factors affecting mergers and acquisitions are changes in technology and other internal
and external environments. But there is a trend for cash deal in mergers and acquisitions
and 60 per cent of mergers and acquisitions are on a cash basis and the deals in cash basis
are of large value too. But this shift of trend has disadvantages for shareholders of both
the companies; acquiring and acquired company.
In cash deal, the duties, rights and obligations are clear cut such as transfer of ownership,
but in an exchange of shares, it is difficult to determine the buyer and seller of both the
parties. There is a large ambiguity as to which business is being acquired and by whom.
Also, there is a possibility of fraud because in most of the cases, the acquired company
ends up owning most of the shares when a share is acquired for the exchange of stocks.
But the decision to pay in shares rather than cash also has an impact on the return of
shareholders because the number of shares is reduced and share price is affected. In an
all-stock deal, the shareholders of acquiring company receive shares rather than cash.

11
Illustration: An investor owns 10,000 shares in a beverages company. When the
company is acquired by a larger company, the universal company shareholders will
receive compensation for their share of ownership in the acquired company. The all-stock
deal may be used when shareholders of the target company prefer to obtain ownership in
the acquiring company rather than a cash settlement. This may also be initiated by
acquiring a company which wants to buy out the investors of the target company but do
not have sufficient cash assets. All-stock deals can be favourable when the merger is
successful and result in acquiring companies. When there is a decrease in value of share
then the all-cash deal is riskier than an all-stock deal.

1.11 Issue of shares for consideration other than cash

When an asset is acquired by the company, the payment to purchase those assets can be
made by cash or by the issue of a share. When a share is issued against the purchase price,
it is known as the issue of shares for consideration other than cash.

1.12 Determination of purchase price

Sometimes one company purchases another company and takes over all cash, assets and
bank balances, liabilities of third parties, etc of the other company. Seller is called the
vender and purchase price payable to vender is called consideration.
The purchase price is determined:

1.13 On the basis of the amount payable

For the determination of purchase price, the sum of the value of the shares to be issued
and cash payable becomes the amount of consideration.

1.14 On the basis of the number of shares

For the determination of purchase price, the product and number of shares and the value
of the shares is given. The shares may be issued at a discount, at par, at premium etc.
1.15 On the basis of assets and liabilities
For the determination of purchase price, the difference between assets and liabilities along
with their resultant value is taken into consideration.

12
1.16 Issue of shares for purchase of assets
The company can issue shares in consideration for acquiring the assets of the business. If
a company purchases assets and assumes liabilities then it is known as the purchaser of
the business.
Promoters are the ones who do the research, technological changes and other work when
the shares are issued to them. It is known as an issue of shares to promoters.

1.17 Issue of shares for consideration as per Companies Act

Securities can be allotted for consideration other than cash. There shall be a PAS 3 form
attached for allotment of securities, along with a copy of the contract duly stamped. In its
contract, it should contain the details of securities which have been allotted to the
shareholders, along with the contract of sale relating to property or consideration other
than cash to be submitted to the tribunal. If the contract has been reduced to writing, it
shall be deemed to be an instrument within the meaning of the Indian Stamp Act 1889
Section 2(a).

1.18 Issue of shares for consideration under FDI consolidation

This topic is very important because the investors of Uber Eats are foreigners. The issue
of shares to foreign investors is brought under FDI policy 2011. This regulation was
brought to check the issue of money laundering in a number of cases, where shares are
issued to foreign shareholders. Prior to 2011 FDI policies, Indian companies were
allowed to issue equity convertible securities under automatic route only if there was cash
consideration.

1.19 Steps required for government approval

In case of issue of shares for capital goods
Ø Any import of capital goods must be made in accordance with the export/ import
policy issued by the Government of India, defined in Directorate General of Foreign
Trade and Foreign Exchange Management Act.
Ø Independent valuation has to be done by the third-party entity excluding second-hand
machinery.
Ø The application should indicate beneficial ownership clearly of both acquiring and the
acquired company.
Ø The application must be completed within 180 days in all respects.

13
1.20 Issue of share in pre corporation expenses
Submission of foreign inward submission certificate for remittance of funds by the
overseas promoters for expenses incurred.
Verification and certification by the statutory auditor for the incorporation of expenses.
Payment to be made to the foreign investor directly or through the bank account under
FEMA regulation.

Conclusion
Zomato acquired Uber Eats for an all-stock acquisition deal. This deal will provide great
discounts to customers and it will be the most beneficial to them. The stock deal is done
by the companies operating in the same line of business. Resulting in Zomato becoming
number one in food marketing and food supply or in other words as the megastar of the
food business. Moreover, Uber Eats can invest their money in other growing business.
Further in this report we can see that how food delivery industry works and what are the
strategies companies used for the success of their own company and we can see the entire
concept of food delivery industry. I also made a report of review of literature on the next
coming chapter.

14
Chapter – Ⅱ
Review of
Literature &
Research
Methodology

15
2. Review of literature

2.1 SOURCE : MONEYCONTROL NEWS FIRST PUBLISHED: NOV 10, 2021

Zomato Q2FY22 results | Loss widens by 87% to Rs 430 crore; revenue surges to Rs
1,024 crore

Higher losses were due to increased spending on branding and marketing; growing share
of smaller and emerging geographies (which are less profitable); and increased delivery
costs.

Zomato, the online food delivery platform, on November 10 announced its July-
September quarter results for the financial year 2021-22.

The company reported a net loss of Rs 430 crore on a consolidated basis compared to a
loss of Rs 230 crore in the same period of last year, an increase of 87 percent. It had
reported a net loss of Rs 356 crore in the previous quarter when it declared its maiden
results as a public limited company. On a sequential basis, the loss for the company
increased by 21 percent.

The online food aggregator recorded consolidated revenues of Rs 1,024 crore for the
quarter compared to Rs 426 crore in the same period last year. The revenues increased by
a robust 140 percent. Compared to the previous quarter, the revenues are up by 21 percent
from Rs 844 crore.

16
Adjusted revenues for the quarter came in at Rs 1,420 crore, a 22.6 percent growth q-o-q
and 144.9 percent y-o-y growth.

The revenues are up due to the opening up of almost all the restaurants across the country
which increased the traffic on its platform.

“Overall customer traffic on our platform in India increased to 59 million average

monthly active users (India MAU) in Q2 FY22 as compared to 45 million in Q1 FY22,”
the company said.

“The company incurred higher losses because of investments in the growth of food
delivery business.”

The company highlighted three reasons for the losses: increased spending on branding
and marketing; increased investments and growing share of smaller/emerging
geographies (which are less profitable); and increased delivery costs due to unpredictable
weather and an increase in fuel prices.

“India food delivery Gross Order Value (GOV) in Q2 FY22 grew by 19 percent QoQ and
158 percent YoY to Rs 5,410 crore ($721 million). This growth was driven by an increase
in the number of transacting users, number of active food delivery restaurants and active
delivery partners on the platform," the company added.

The company attributes a large part of the increase in transacting users (and revenue) to
an increase in branding and marketing expenses which were dominated by television and
digital marketing.

The adjusted revenue for India food delivery contributed 88 percent to the total adjusted
revenues and grew by 20.7 percent q-o-q to Rs 1,250 crore.

The contribution as a percentage of GOV was 1.2 percent in Q2 FY22 as compared to 2.8
percent in Q1 FY22. “The reduction in Contribution margin is on account of increased
investments in growth geographies (emerging cities, less profitable than mature cities)
and increase in delivery cost per order,” the company highlighted. The delivery cost per
order increased by around Rs 5 in Q2 FY22 as compared to Q1 FY22.

“We don’t expect the delivery costs to go up further and overall feel confident about our
Contribution margin staying positive in the mid, as well as long term,” the company
stated.

17
Revenue from the B2B supplies business, Hyperpure, grew by 49 percent q-o-q to Rs 110
crore this quarter. Hyperpure is now present in eight cities and supplies were made to
over 12,000 restaurants every month on an average in the quarter.

At EBITDA level (adjusted), the company incurred a loss of Rs 310 crore increasing by
82 percent from the loss of Rs 170 crore in the first quarter and by 143 percent from the
loss of Rs 70 crore in the previous year.

On the investment front, in addition to the planned investment in Curefit, the company is
making two new minority investments. It will be investing around $75 million in Bigfoot
Retail Solutions Pvt Ltd (Shiprocket) for an eight percent stake.

Another investment of $50 million will be in Samast Technologies Pvt Ltd (Magicpin)
for a 16 percent stake as part of a total round size of $60 million.

“Including our $100 million investment in Grofers earlier in August 2021, we have now
committed $275 million across 4 companies over the past six months. We plan to deploy
another $1 billion over the next 1-2 years, with a large chunk of it likely to go into the
quick-commerce space,” the company confirmed.

The stock of Zomato declined Rs 1.60 (-1.16 percent) on November 10 and closed at Rs
136.05. The stock is up 8.6 percent in the past three months and flat during the past one
month.

2.2 INDIA’S OLA SWITCHES GEARS ON ITS FOOD DELIVERY BUSINESS,

FOODPANDA
MANISH SINGH@REFSRC /MAY 22, 2019

India’s Ola, Which Has Expanded To Select International Markets And Set Ambitious
Goals For Its Electric Vehicles Business, Is Struggling With Selling Food. So It Is Making
Major Changes To Its Food Business.
The Ride-Hailing Giant Is Pivoting Foodpanda, The Indian Business Of The Food
Delivery Startup It Acquired In Late 2017, To Focus On In-House Food Brands, Sources
Familiar With The Matter Told Techcrunch. Unlike Market Leaders Zomato And
Naspers-Backed Swiggy That Work With Tens Of Thousands Of Restaurants To Deliver
Food, Foodpanda Will Now Focus On Expanding Its Own Portfolio Of Private Labels,
Sources Said.

18
Ola Currently Has More Than 50 Kitchens And Four Private Labels — Flrt, The Khichdi
Experiment, Love made And Grandma’s Kitchen — That Cover Items Such As Shakes,
Biryani And Khichri, A Dish From The Indian Subcontinent Made From Rice And
Lentils. They Operate In Bengaluru, Delhi, Mumbai, Pune And Chennai. The Pivot
Comes As Foodpanda Finds Competition From Zomato And Swiggy Unsustainable, One
Of The Sources Said. Local Newspaper Mint Reported Earlier Today That Ola Was
Suspending Food panda’s Business In India.
“As part of our ongoing business repurposing initiatives, we are focused on building a
portfolio of own food brands and curated food offerings through our fast expanding
network of kitchens. Many of these offerings are already available in all major cities
through the Ola and Foodpanda apps. We continue to invest in expanding our facilities
and kitchens, as well as our portfolio of food offerings for customers. We remain
committed to our mission of building a superior food experience for millions of our
customers,” a company spokesperson said in a statement.
Foodpanda, which operates in more than 10 other markets under a different owner —
Delivery Hero — remains fully operational outside of India.
After acquiring the India business of Foodpanda, Ola’s second foray into food business,
the company aggressively tried to court customers by offering heavy discounts in early
2018. The company said then that it would invest $200 million in Foodpanda business.
But later in 2018, the discounts began to run thin as Ola revised its strategy for the food
business, one of the sources added.
The move comes as Zomato and Swiggy remain locked in a fierce battle in India, leaving
little room for anyone without deep pockets and strong commitment. Uber has attempted
to sell off its UberEats business in India to either of the two giants, but failed to get a deal,
people familiar with the matter said. The San Francisco-headquartered firm, which went
public earlier this month, has since cut its spendings budget for UberEats in India, a
source familiar with the matter said.
Ola, which leads the ride-hailing market in India, has struggled with food business in the
past, too. In 2015, it launched OlaCafe, a food delivery service that did not take off and
was shut down a year later.
As of September last year, Foodpanda was processing about 3 million orders a month,
compared to Swiggy and Zomato, both of which claim to handle more than 30 million
orders in the same period.

19
According to Mint, Ola has terminated contracts of most of its 1,500 food delivery
partners, and laid off about 40 people. As of Wednesday morning (local time), the vast
majority of restaurants listed on Foodpanda and Ola apps were not servicing in major
cities.
India has emerged as one of the largest food-technology markets globally in recent years.
It could be worth up to $2.5 billion by 2021, according to consulting firm RedSeer.

2.3 Flurry of orders rings out 2021 for Swiggy, Zomato

Source: The Economics Times / jan 2, 2022
Mumbai: Online food delivery platforms Swiggy and Zomato NSE 0.38 % hit an all-
time high in sales volumes on New Year’s Eve 2021, as people stayed indoors owing to
a surge in Covid-19 cases.
Zomato said it clocked over Rs 100 crore in gross merchandise value (GMV) — which
indicates the value of food ordered on its platform — compared to Rs 75 crore it had
snagged last year on December 31. Arch-rival Swiggy said orders delivered grew 62%,
while GMV went up 61% on Friday, against last year.
At 9 pm on Friday, Swiggy said it crossed 2 million orders while Zomato touched 2.5
million orders as of 11:15 pm.
n an aggressive bid to showcase the demand surge, Zomato cofounder and chief executive
Deepinder Goyal and Swiggy cofounder and CEO Sriharsha Majety live-tweeted the
orders per minute (OPM) throughout Friday evening.
At the time, the two had crossed 7,000 orders per minute, setting new records.
“The ongoing surge in the number of guests preferring to stay home (led to) a lower-than-
expected turnout at some of the restaurants, which (in turn) led to increased online
orders,” said AD Singh, managing director of Olive group of restaurants, which operates
15 brands such as Monkey Bar, Guppy and The Fatty Bao across six cities.
The online orders were almost double of what is seen during a busy weekend, he added.
Swiggy’s order per minute reached 9,500 in the evening, surpassing last year’s record by
1.7 times, even as the number of new users increased 80%.
Jimmy Kuruvilla, vice-president of operations, Food Matters Group, which runs high-end
restaurants such as The Table in Mumbai, said a majority of orders on New Year’s Eve
were through online channels and demand doubled compared to a typical Friday night.
Swiggy and Zomato have been preparing for the anticipated surge by expanding their
delivery fleets, support and operations staff in anticipation of a record spike in orders.

20
2.3.1 Delivery staff shortage
Swiggy, which had about 300,000 partners on the road on Friday night, introduced a
bunch of incentives that made December the highest-earning month for delivery partners,
a Swiggy spokesperson said Despite the preparations, the unprecedented scale of demand
led to order delays and a shortage of delivery personnel. Dotpe, a startup which helps
offline businesses with commerce and payments, experienced a waiting time of more than
20 minutes for delivery staff for orders placed after 8 pm. Zomato rerouted delivery
partners to areas with higher demand by offering additional payouts per kilometre.
The advance preparations were not limited to online food aggregators. Even restaurants
were expecting a busier-than-usual New Year’s Eve. Several food outlets hit full capacity
around 8-9 pm and resorted to pausing orders to catch up with the backlog.
Anshul Gupta, founder of cloud kitchen startup EatClub, which operates eight brands,
including BOX8 and MOJO Pizza, across five cities, including Bengaluru and Pune, said
their order volumes doubled compared to a normal Friday evening. He said order value
rose 50%, which meant total orders grew three times against usual numbers.
“Due to Covid-19 restrictions and this kind of surge in demand, it was quite inevitable
that a lot of kitchens finally capped out because demand was extremely concentrated
between 7-11 pm. Kitchens are made for a certain capacity and even with all the
preparation and all the processes that one could implement, there is always a cap to just
how much food a kitchen can make,” said Gupta, whose restaurants use both direct
platforms and food delivery firms.
Direct ordering platforms Thrive and Dotpe also clocked four-five times increase in order
volumes compared to a typical weekend, the companies said separately.

2.3.2 Quick commerce

Quick commerce players Zepto, Instamart and BlinkIt (formerly Grofers) also witnessed
record order volumes. As people stayed and celebrated at home, orders for party essentials
and groceries went up.
Swiggy’s Instamart recorded 63% more orders and a 74% increase in GMV compared to
the rest of the month, beating its own previous Christmas day peak. The order intensity
peaked closer to dinner, with 17,662 being placed in 30 minutes alone, a company
spokesperson said. “It was the highest number we've seen so far, a surge by 40% of what
was planned,” said Aadit Palicha, cofounder of Zepto, a Mumbai-based ultrafast delivery

21
startup. “The average order value on Friday was much higher than normal because of
bulkier party orders.”

2.4 NEED OBJECTIVES AND SCOPE

2.4.1 Need for The Study

This report explores the three key elements of the food service delivery value chain:
aggregators, cloud kitchen operators and restaurants that also deliver. The emergence of
the online food delivery services could be attributed to the changing nature of urban
consumers. These consumers use food delivery services for a variety of reasons but,
unsurprisingly, the most common reason seems to be the need for quick and
convenient meals during or after a busy work day. The various food delivery services
that are readily available take the hassle away from consumers to think about and plan
meals, regardless of whether the consumer is preparing the meal himself, going to the
restaurant and dining in or going to the restaurant and buying food to bring back to the
office or home. Food delivery services have changed consumer behaviour so much,
especially urban consumers, that using the OFD services have become normal and
routine. More and more people are turning to food delivery in recent years because of
the current pace of life as well as the opportunity to discover more restaurants that
food delivery offers. For many busy urbanites, OFD services are a convenient option
during a busy work day in the city. Many prefer this option of food delivery as this allow
them to have fresh and healthy food at their offices or homes while they have the freedom
to continue to work. This is also an advantage as city dwellers can use OFD services after
a long day at work, preferring to go home and relax instead of spending a few more hours
out waiting for food or travelling to and just to get something to eat. It can be seen that
the OFD services provide convenience and time savings for customers as they can
purchase food without stepping out from their home or offices. The OFD services are
slowly but surely impacting the food and beverage industry because of its potential to
grow the business, ensuring higher employee productivity, delivering order accuracy
and building important customers database. will find current online food delivery
situations, who are in the leaders of online food delivery, what is the most important in
online delivery and to find the complete details of online food delivery industries.

22
2.5 Tools Proposed to Be Used

Relationship analysis, Basic graphs, Box – plot diagrams, tables etc

2.6 Objectives of the Study

1. To understand the concept of Indian online food delivery market.

2. To analyse factors that will influence the growth of foodservice delivery in India.
3. To determining best practices in online food delivery market.

2.7 Scope and Limitations of the study

As per the present lock down situation some data cannot be study and also due to time
constraints.

2.8 Data Sources

For validating the objectives, developing the models only

secondary data is used.

measurable.ai, Wikipedia, www.expertmarketresearch.com, Tasanaya research and

analysis, Zomato.com, swiggy.com

2.9 Secondary Data

Secondary data for developing the model, validating the objective, hypotheses secondary

data is required which is proposed to be collected from secondary sources

23
 Chapter – Ⅲ
Industry Profile

24
3. Industry Profile

The Indian food market is massive. As of 2019, the organized food market that includes
restaurants was worth $22 billion, of which online food delivery only made up about 15%.
That shows the huge growth potential of the food delivery sector in the country. In 2020,
India’s online food delivery market was valued at approximately $5 billion. The COVID-
19 pandemic helped grow the sector, and it’s expected to reach about $21 billion by 2026
at a CAGR (compound annual growth rate) of nearly 30%. Growth is mainly concentrated
in large cities such as Mumbai, Delhi, and Bangalore.

The top 7 to 10 cities make up about 70% of the business. The remaining 490 cities fill
in the rest but are growing. In the past six months, these smaller cities have seen business
double. We’ve seen an aggressive movement of people to smaller cities, and with the
hesitancy of online food ordering decreasing, smaller cities are rapidly accelerating.
There’s a lot more awareness in these places that people can get food delivered instead
of going to a restaurant. Older parents, who are not the original target generation, are
starting to place orders. More delivery-oriented brands are seeing opportunities to open.

Currently, the space is dominated by Zomato and Swiggy, and their market share is too
close to call a winner at this point. For the past few months, Amazon has been operating
in Bangalore — it’s currently a sub 1% player in the market.

Swiggy’s strategy is being the king of convenience. The company is looking for other
things to be delivered to customers quickly and to offer convenience — hence why it
expanded to grocery concierge services. The publicly stated vision of Zomato, which
started out as a restaurant discovery platform, is that it wants to be a farm-to-fork
company, with food delivery being a big part of it. It’s also launched a B2B grocery
service for restaurants to get them integrated into its network.

At their heart, these businesses are very simple. There’s a customer acquisition funnel; a
certain percentage of them will be retained or reactivated monthly. The market has seen
acquisition costs as low as 200 rupees and as high as 4,100 rupees, with a large chunk of
them in the 200-500 range. As the industry penetrates deeper, that number might increase,
because while it’s easier and cheaper to acquire the early adopters, the subsequent users
will require more investment to convert.

25
3.1 Here are the factors driving the Indian food delivery sector:

3.1.1 Indian Food Delivery: Business Model

Restaurants pay a percentage of the revenue coming to them as commissions to the

platforms. Customers pay delivery fees for the service. Delivery fees are one piece that’s
flexible. With customer education, communication, and product, companies can keep
increasing fees over time. There are additional monetization measures in place, including
leveraging visibility inside the app or leveraging the delivery fleet capability. There’s also
levers when people place orders that nudge them to buy additional items, such as a starter
or beverage, often with the promise of a discount.

The single largest cost to these companies is paying delivery executives on a per-order
basis with a suite of incentives. Other models have been attempted, but approximately
90% of orders today are based on a gig economy format. The second-largest cost is
promotions, which varies month to month; for example, India has a cricket festival, the
Indian Premier League, during which discounts spike. The other two large costs are
customer service, such as having to run a call center or chat-based support when orders
go wrong, as well as refunds. Then there are small miscellaneous costs, such as for
payment gateways.

3.1.2 Indian Food Delivery: Potential Customers

Remember, the penetration rate of the sector is currently low, as there’s a large chunk of
Indian users who are just starting to come online with smartphones. This is one of the
reasons why all the food delivery players went from a 10- to 20-city footprint at the start
of 2019 to more than 400 cities by the end of that year. Clearly, a lot of people are coming
on board for this concept.

Massive discounts are playing a large role in acquiring customers at this stage. The same
customer is shopping across different platforms. Only between 25% and 35% of users
continue to stick with the platform three months after they’ve been acquired. Companies
are dumping money at the top of the funnel, and it’s leaking all the way through without
retaining customers.

26
3.1.3 Indian Food Delivery: Retention Offers

Companies are putting a lot of time, effort, product development, and strategic thinking
into retention. For example, Swiggy has a subscription program called “Super” that
allows customers to make the delivery fee more affordable by buying packages for one
month, three months, or a year. Zomato has Zomato Pro, a subscription/loyalty program.

Even before COVID-19 hit, these companies across the board had already started moving
toward more sustainable unit economics and are pretty much in positive territory. Today,
the companies probably have the best unit economics they’ve ever had.

3.1.4 Indian Food Delivery: Looking to a Post-COVID-19 World

The pandemic has had mainly two impacts on this industry: order volume, which went
down and up, and profitability, which saw a huge upswing.

There are possible tailwinds still to come. The overall health of the economy will likely
have an impact on discretionary spending of people over a longer period. If the country
recovers well, this won’t be a problem. The second is restaurant mortality. Having a good
assortment of restaurants is a non-negotiable for the category to grow. The flip side of
that is with the closing of traditional restaurants with large dining spaces, there’s an
aggressive shift toward delivery-oriented infrastructure. That means a lot more ghost
kitchens, which scale very fast. Big chains are opening more and more outlets during this
time to take advantage of the fact that they have the money and staying power. As more
delivery-oriented supply exists, that’s only good for consumers in terms of the assortment
options.

Both companies also offer good benefits to their delivery executives, such as life
insurance and group accident covers, so if anyone is injured at work and hospitalized,
they get cashless cover. These benefits are already in place, so at no additional cost, they
likely bring peace of mind to delivery executives.

This industry will likely grow as India’s social and economic climate improves and street
food vendors and their ilk move into the organized food space. The rate of growth of the
restaurant market could vary over time, but it would certainly grow faster than the overall
food delivery sector itself.

27
3.2 Food Delivery Business Model – Pros and Cons

While food delivery applications are hard to build and even harder to execute, they
possess a tremendous amount of potential.

According to Crunchbase, food delivery startups have raised a combined total of $15
billion in over 800 rounds of venture capital funding. Many went on to become integral
parts of our daily routines.

With that in mind, let’s look at some of the pros and cons of operating a food delivery
business.

3.3 Food Delivery Business Model – Advantages

Product stickiness. Once customers become acquainted with a platform, they rarely
switch to a new app. Research by McKinsey shows that 77 percent of customers rarely
switch platforms. But: the higher competition is in a country, the more often customers
tend to experiment with new services.

1.Network effects. Since product delivery platforms are a, in a bigger sense,

marketplaces that connect buyers with suppliers, they end up benefiting from network
effect once sufficient scale is hit. While networks are hard to build, they are even harder
to replicate. This yields substantial benefits for those who are able to build a big enough
business.

2. Supply prioritization.

As a food marketplace, your business can decide which restaurants and suppliers it would
like to promote. This allows you to push products with higher margins and good customer
ratings.

3.Pricing monopoly.

Next to prioritizing supply, food delivery businesses can also set prices and commission
at will once they’ve hit sufficient scale. There is plenty of examples where quasi-
monopolies raised fees right after acquiring their last competitors. Since restaurants are
dependent upon those apps for receiving orders, they have no choice but to comply with
any change.

28
3.4 No legal commitment to drivers.

While ethically questionable, drivers are generally not employed by food delivery
businesses, but rather work on a contractual basis. This greatly minimizes operational
costs as they only get paid when executing jobs. Furthermore, there is no requirement to
pay medical insurance or allow for paid vacation.

3.5 Food Delivery Business Model – Disadvantages

1. High operating cost. DoorDash supposedly lost $400 million in 2019 while Postmates
had to lay off dozens of employees and close some offices. Those are just two examples
of food delivery businesses that had to pay the price for their massive operating cost and
thin margins. Companies that operate under the full-stack model suffer from this
especially since everything is kept in-house.

2. Operational complexity. Developing the app, finding suitable restaurants and drivers,
equipping them with necessary equipment, or optimizing delivery routes are just some of
the many problems food delivery businesses have to invest in. Perfectively running such
a business is not only extremely costly, but a highly complex task involving many parts
to be running perfectly.

3. Fierce competition. There’s a total of 572 food delivery businesses – in the US alone.
With venture capital funding being at an all-time high, it’s never been easier to start.
Furthermore, they compete against other restaurants and the customer’s willingness to
cook from home

3.6 Essential Metrics & KPIs

Food delivery is a multi-layered process that involves several parties. As such, it is

advisable to track the performance of each of those parties involved.

To recap, these include the operator of the platform, restaurants, drivers, as well as
customers. Let’s look at them in more detail.

3.7 Platform KPIs

To assess how mature the business as a whole has become as well as showing positive
developments to investors and key stakeholders, it is important to track company-wide
platform KPIs. These span over multiple stakeholders and indicate the overall success of
the business.

29
3.8 Total Amount of Orders

Next to the money you’re generating, knowing how much orders you are receiving is the
most important metric when assessing how a food delivery business is growing.

In the venture capital world, investors often strive for growth and the number of orders is
one of the metrics to show that. Generally speaking, very early-stage food delivery
businesses are expected to double the number of orders they fulfill every month. Mature
businesses such as GrubHub grow much more conservative, with a rate of around 20 to
30 percent per quarter.

3.9 Average Number of Deliveries/Orders Per Hour

The Average Number of Deliveries/Orders Per Hour demonstrates whether a business has
achieved sufficient density to realize sustainable unit economics (i.e., positive
contribution margins).

Consequently, the higher the number of deliveries and orders per hour becomes, the more
indicative it becomes how much scale a platform has achieved.

To calculate it, simply the total amount of orders and/or deliveries per hour over a given
timeframe (e.g., week, month, or quarter) and divide by the number of hours chosen.

Let’s assume we want to compute the average number of deliveries for one day. In our
example we fulfilled 2000 orders for that day, with a day being 24 hours. That would
yield an average of 2000 ÷ 24 = 83.3 deliveries per hour.

The calculation can also be broken down over a bigger timespan. For instance, we can
get the total amount of orders for one week for 1 to 2pm and divide it by the number of
days (= 7) to receive the average amount of orders we receive between 1 to 2pm.

3.10 Average Profit Per Delivery

Every business has to eventually turn a profit and despite their gigantic funding rounds,
food delivery businesses are no exception to this norm.

As such, knowing how much profit you make on every delivery is crucial and helps weed
out the profitable restaurants and delivery routes from the bad performing ones.

Depending on how the corporation is structured, expenses such as marketing, payroll, or

cost of operations have to be accounted for as well.

30
3.11 Driver & Restaurant KPIs

Drivers and restaurants are the parts of your business that make the food and execute the
order; hence their importance cannot be overstated.

Perfecting the whole delivery chain is a highly complex operational problem and requires
optimization on many ends. The following metrics allow us to do just that.

3.12 Average Order Duration

The Average Order Duration serves as an indicator as to how fast your business can fulfill
a customer’s order. An order takes place from the moment a customer places purchases a
meal on the app to the point when he sends the confirmation that he/she received it.

To calculate your Average Order Duration, you sum up the time it takes to deliver orders
in a given timeframe and divide it by the amount of orders fulfilled.

Average Order Duration = Sum of Delivery Time ÷ Total Amount Of Orders

If it took your business a total of 2000 minutes to deliver 100 orders, then your average
order duration is 20 minutes per order. Consequently, the goal I to minimize order
duration.

The order duration can be furthermore broken down into the time it takes both the
restaurant and driver to fulfill an order. Those metrics can then be compared to other
restaurants/drivers to weed out the slow performers.

Knowing, for instance, how much it takes an average pizza store to cook an order can
help you in the assessment process when onboarding new restaurants.

3.13 Percentage of Driver Is on Order / Idle

Measuring the percentage of drivers that are currently either occupied with a delivery or
waiting for another allows a food delivery app to assess how efficient their driver network
operates.

Hereby, the business can assess which time of the day has the highest demand and as such
determine how many drivers must be active throughout each period of the day.

Percentage of drivers that are on order vs. idle can be calculated by taking the total amount
of currently active drivers and dividing it by the number of drivers executing or waiting
for an order.

31
Percentage Driver on Order = (Driver on Order ÷ Total Active Drivers) x 100

Percentage Driver on Idle = (Driver on Idle ÷ Total Active Drivers) x 100

The goal is to maximize the number of drivers on order and minimize the drivers that are
waiting for one.

The calculation is especially important for delivery businesses that follow the full-stack
model as drivers are often employed by the company (and not working on a contractual
basis).

3.14 Number of Support Tickets

Support tickets are incidents that require the platform’s help to resolve outstanding issues.
Examples include disputes such as incorrect or damaged deliveries, wrong ingredients,
or missing items.

First and foremost, we can track the amount of outstanding as well as closed support
tickets. Furthermore, we can analyze the speed at which we are able to resolve these
issues.

This can be done across the whole business as well as on the restaurant level. As such,
we can identify restaurants that tend to cause unacceptable amounts of support tickets.
This information can be used to either downrank them on the platform or discontinue the
relationship altogether.

3.15 Customer KPIs

Last but not least, it is crucial to know how much we make from our customers, how
much we can spend to acquire them, as well as how happy they are with the service.
Hence, the following metrics are crucial to keep an eye on.

3.16 Churn Rate

Churn Rate (also called Customer Churn) refers to the rate at which you lose customers
for a given timeframe (i.e. monthly, quarterly, or annually).

The Churn Rate is calculated as follows:

Churn Rate = (Users At Beginning Of Period – Users At End Of Period) ÷ Users At

Beginning Of Period

32
Let’s say your food delivery startup has 250,000 users at the beginning and 230,000
customers at the end of the month, then your Churn Rate is equal to (250,000 – 230,000)
÷ 250,000 = 8 percent.

Churn Rates tend to fluctuate quite heavily, especially in the food delivery business.
Studies show that over 86 percent of newly acquired customers will stop using a service
within two weeks of the launch. The high churn is a result of the low entry barriers in
creating a food delivery app as well as the intense amount of competition in the space.

There are many factors that influence the retention of customers, including:

Ø Seamlessness of user experience

Ø Level of customer service
Ø Stickiness of the product
Ø Available supply (i.e., restaurants and drivers) and consequently quality of food
offering
Ø Speed of delivery

3.17 Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) tells you how much revenue, on average, you a
generating from a user over the course of their membership. The longer a customer is
using the app and/or the more they spend, the higher their lifetime value will be.

Knowing how much you make from a customer over the course of their usage can allow
you to assess how much money you can spend on acquiring them (more on that later on).

The formula for calculating CLV looks as follows:

CLV = ARPA ÷ Churn Rate

ARPA represents your average revenue per account for a given period (e.g. monthly). It
is calculated by dividing the revenue for the chosen period by the number of customers
in that same timeframe.

For instance, if the average revenue per account/customer each month is $10, and the
percentage of customers that do not return is 20% (= Churn Rate), then CLV is equal to
$50.

33
Next to knowing how much you can spend on acquiring a customer, CLV also indicates
what kind of products customers with the highest CLV desire, which product types
generate the highest revenue as well as who your most profitable customers are.

3.18 Net Promoter Score (NPS)

Net Promoter Score (NPS) is a direct measure of how much value your customers are
gaining from using your product.

The result of calculating NPS gives a proxy about how likely your customers are to
recommend your business to someone else. It is measured on a scale from 0 to 10 with 0
being no recommendation while 10 indicates they absolutely would endorse your app.

NPS is separated into three distinctive categories, including:

Detractors (customers giving a score of 0 – 6)

Passives (customers giving a score of 7 or 8)

Promoters (customers giving a score of 9 or 10)

The score is calculated by subtracting the percentage of detractors from the percentage of
promoters.

NPS = % Promoters – % Detractors

The calculation should result in a score between -100 and +100. For instance, if your
survey yields 60 percent promoters, 20 percent passives and detractors respectively, then
your NPS would be equal to 60% – 20% = 40. It is advised to measure NPS as often as
possible. This allows you to assess how customer satisfaction evolves over time while
allowing your business to proactively react to any negative

The Platform to Consumer model currently represents the dominant mode of food
delivery. It accounts for 63 out of the $122 billion that are generated in sales per year.

3.19 Market dynamics and segments

In the last five years or so, the foodservice delivery market in India has seen
unprecedented change; new entrants powered by sophisticated technology have radically
changed the market dynamics and innovative models, exemplified by cloud kitchens,
have been created successfully.

34
Today, the foodservice delivery market has a variety of players and business models,
some that compete and others that are more symbiotic. The key categories are:
aggregators, cloud kitchens, hyperlocal services (food service delivery and more) and
restaurant partners (QSR, CDR, desserts and ice-cream, café). We shed light upon each
of these segments, talking about delivery trends, our estimation of their growth in next 5
years as well as the way forward.

In the early days of foodservice delivery, aggregators in India were marked by many
launches, acquisitions, consolidation and business closures. Today, two major players
remain: Swiggy and Zomato who between them own 85% of the delivery market (based
on GMV).

The battle for consumer loyalty between the aggregator deliverers and restaurant
operators is fierce. Issues such as deep discounting, contracts and commissions, brand
experience and customer perceptions have led to confrontation between the two parties.
Aggregators are able to mask customer data which means that the operators cede the
knowledge of, and their relationship with, their customers.

In the absence of data sharing, it is not possible for the operator to understand its delivery
customers, market to them, measure loyalty etc. On the other hand, it means that the
aggregator deliverer owns valuable information about customer habits and preference
which can be used to improve customer experience.

There are numerous ways in which restaurant brands can minimise risks of losing control
to aggregators. For example, restaurant chains have invested in self-managed delivery
programmes for direct connection with customers to provide greater control over quality,
branding and other marketing imperatives. Examples of brands taking action include
Impresario Hospitality, Fat Lulu Pizza and Cold Love Ice Cream. Domino’s, McDonald’s
and Pizza Hut are also developing algorithms on their apps to increase their visibility to
customers in order to reduce customer acquisition costs and to foster sustainable business
models. This does not mean they will eliminate their presence on aggregator platforms
rather the two systems will coexist.

3.20 covid is changing the industry

The rapid spread of covid has made Indian consumers skeptical about ordering food
online (compared with other national markets where restaurant delivery increased

35
substantially during covid). The overall result of covid has led to a 70% drop in overall
revenues from March 2020 to the end of 2020 with the better brands recovering to 50-
60% of pre covid sales towards the end of the period.

Most restaurants in India (and indeed the world) work on 10%-15% EBITDA margins
but with limited free cash flows. One of the largest in the service sector, the restaurant
industry contributes approximately 3% to the GDP of India and is the service sector’s
single largest employer with more than 7.3 million people on its payroll.

We address how the industry is adapting to covid-19 throwing light upon the current state
of the market and the way forward, various sanitation and hygiene protocols implemented
by players, food innovation like DIY kits, increase in alternative trade areas, etc.

3.21 Future growth of the market

The Indian foodservice delivery market has a 15% share of the total INR 4,62,013 crore
Indian organised foodservice market. This share is similar to the share in the UK and
somewhat higher than that in the USA. In common with these countries, there is
considerable potential for growth as restaurant delivery starts to eat into the retail
market’s share of wallet.

36
Data source: www.tasanaya.com

3.22 Factors that will influence the growth of foodservice delivery in India

• Economic factors such as GDP growth, increase in disposable incomes, increased

internet and smartphone penetration.

• Consumer behavioral changes such as reduced time available for preparing meals at
home to fast- paced urban lives, young working people replacing home cooked food to
delivery subscription meals (home-style food).

• Regulatory policy changes such as increased delivery costs due to stringent labour laws;
and increased minimum wages. This could lead to an increase in selling prices.

• Market forces such as the emergence of new aggregator- deliverer players (such as
Amazon and Pace); potentially reduced levels of investment in existing aggregators.

3.23 Key Food Delivery Challenges

With more and more customers opting for ordering food online, the evolving marketplace
is rapidly becoming very competitive and challenging. Identifying these challenges and
addressing them aptly will help businesses stay afloat. Let’s take a look at those critical
challenges faced by the current players in food delivery space.

1. The Shift in Customer Preferences

Increasing the market share by offering the best possible value to customers at the best
possible cost should be the main focus of the food delivery business. The existing players
have elevated the marketing game to such a level that customers are spoilt for choice even
as competition is northbound, thereby making customer base unstable and affecting brand

37
loyalty. In pursuit of controlling customer attrition, food delivery businesses are
deploying marketing strategies and tactics to increase engagement and spread the word-
of-mouth.

2. Fluctuating Market Prices

Prices for raw materials to prepare food is also highly volatile. In this kind of scenario,
getting the right price and grabbing customer attention is a huge challenge. High operating
costs further add up to the worry and thus affects profitability.

3. Adhering to Quality Standards

The massive surge in online orders makes businesses strive for maintaining food quality
standards. There will always be a difference in the food that is freshly served at the
restaurant versus the one delivered at doorsteps after travelling a few minutes and hence,
companies should find new ways to address the same.

4. Improper Handling of Food

Mishandling of ordered food items is the biggest challenge faced by the industry
currently. Only a handful of companies have proper measures in place to address the
issue. Hygiene issue turns away a lot of customers, so should be handled with care.
Providing proper training to the ground staffs are important and companies should invest
in doing so.

5. Logistical Challenges

A major chunk of the business depends on how efficiently the logistics work to cater to a
wider geography. Allocating the right staff, the right number of vehicles remains key
while ensuring proper quality of the food. Last-mile delivery plays a key role and
companies should pay attention to it for churning out happy customers.

In the coming chapter we can see review of literature and research methodology in this
we can find more detail about food delivery industry.

38
Chapter – Ⅳ
Data Analysis
&
Interpretations

39
4. ANALYSIS & INTERPRETATIONS OF DATA
#1. Competitive analysis between Zomato & swiggy

ZOMATO SWIGGY
Year of Foundation July 2008 July 2014

Founders Deepinder Goyal Sriharsha Majety

Nandan Reddy
Pankaj Chaddah Rahul Jaimini

Headquarters Gurgaon, Haryana, India Bangalore, Karnataka,

India

Area served Worldwide 300+ cities across India

Services Food Delivery 1. Food Delivery

2. Online Grocery
3. Courier

₹2,118.43 crore ₹2,776 crore

Revenue (US$280 million) (2021) (US$370 million) (2020)

Net income ₹−812.80 ₹916 crore (2021)

crore (US$−110 million)
(2021)

Total assets ₹8,703.55 crore (US$4.9 billion) (2021

(US$1.2 billion) (2021)

Total equity ₹8,093.01 crore (US$1.25 billion) (2021)

(US$1.1 billion) (2021)

Market share Over 43% of users (2021) Over 44% of users (2021)

Share value 125.90 INR (20 JAN 2022) 105.47 INR ( 20 JAN 2022)

40
 Number of employees 5,000+ & 310k Delivery 5,000+ & 2 Lakh+ Delivery
Paetners Executives

Owner Info Edge (18.6%) Bundl Technologies

Uber (9.1%) (Parent)
Alipay Singapore (8.3%)
Antfin Singapore (8.2%) SuprDaily (Subsidiaries)

Key people Deepinder Goyal (CEO) Sriharsha Majety (CEO)

Rahul Bothra (CFO)
Dale Vaz (CTO)

Strategies Zomato runs Search Ad Popular ad campaigns

Campaign using Google 1. Super-Fast Delivery to
Adwords. It targets the Rescue
keywords related to food, 2. No Minimum Order
ordering online, names of 3. Try something new
restaurants and much more.
Interduce other services
Social Media like
Marketing: It targets
users whose intent is to get 1. Instamart
some food delivered to 2. Swiggy Genie
them. Along with this, it 3. Health Hub
runs promotions on
Facebook and Instagram to
target users on these
platforms.

Industry Online Food Ordering Online Food Ordering

Website www.zomato.com Www.Swiggy.com

Source: Wikipedia
The Indian online food delivery market is surely undergoing revolutionary times, with
significant consolidation and sizable investments from tier-1 investors. The Indian food
delivery market is almost like a duopoly, where both Swiggy and Zomato will continue
to operate as independent aggregators. While both Indian food tech giants are flush with
funds and pass the USD 1 billion unicorn mark, the upcoming fight is no longer about

41
market share but rather, expansion into adjacent sectors.Zomato has chosen to deepen its
focus on B2B services for restaurants, while Swiggy is going all-in and investing its
energy into new non-food categories like Swiggy Go, Instamart, swiggy Genie and health
hub etc.

Every customer has different requirements. When customers want their food to be
delivered fast, Swiggy can be the best option for them. And, when you are looking for
good food at a discounted price, you cannot ignore Zomato.

In addition to this, Zomato is winning with its social media advertising while Swiggy has
left no stone unturned when it comes to TV commercials.

In the war between the food delivery apps, Swiggy is already a winner in terms of a
number of orders but closely accompanied by Zomato.

There are a number of criteria to decide who will win the hunger games. If you want to
order from the small restaurant near your home or office, Swiggy might be a great choice.
However, if you are in search of “cash backs,” there is no better option than Zomato.

Eventually, it does cut down to individual needs. For me, both are doing fantastic, but for
offers, Zomato is a clear winner.

#2. Most popular food delivery applications across India as of August 2021

Source: www.expertmarketresearch.com

As per the results of a survey on Indian food delivery apps conducted by Rakuten Insight
in August 2021, Zomato was the most popular food delivery application. The second
popular food delivery app in the country was Swiggy.

42
#3. India Online Food Delivery Market share by cuisine

Source: www.expertmarketresearch.com

Online food ordering is the simple and convenient way of ordering food, either through a
restaurant or a fast-food chain’s own website or mobile application or through a website
or app offering options for food delivery across multiple restaurants. Cuisines like fast
food, Indian, Chinese, and Italian, among others are available in the platforms.

#4. Delivery Market size in India

43
Source: Tasanaya research and analysis
The Indian foodservice delivery market was worth INR 37,440 crore (US$ 5.2 billion) in
GMV in 2019-20. It grew at 33% CAGR over the previous 3 years.
We forecast that food service delivery will reach INR 93,600 Crore (US$ 13 billion) by
2022-23.

#4. Who has the biggest plate?

Since January 2019, Zomato has always dominated the market in terms of revenues. As
seen in the graphic below, Zomato had a much wider lead over Swiggy and managed to
keep up its sales momentum until the beginning of April 2020. This is when COVID-19
struck, and the nationwide lockdowns began.

It was not until the end of May 2021 that Swiggy sales caught up with Zomato’s, and the
two competitors became more on par.

Source: measurable.ai

In terms of average monthly spending among the players, we gathered that users on
Swiggy would spend more per transaction than on Zomato. Pre-COVID-19, the average
spend on Swiggy was roughly INR 220–250 (USD 3–5). Spending seems to have picked
up by a whopping 30% during the 2nd stage of the lockdown [between late April and
May], with average transaction values hovering at around INR 300–350 (USD 4–5).

44
We attribute the first drop in spending to most restaurants being shut during the first
lockdown in late March 2020. Consumers have shied away from online food ordering due
to apprehensions about safety and a general preference for home-cooked food. However,
after a month or two of lockdowns, things have picked up again, and recovery has been
fast. We attribute this largely to the prolonged boredom from eating at home and the
desire to eat outside again, along with the re-opening of restaurants for food delivery.

#5. Indian Food Delivery Monthly Average Spending

Source: measurable.ai

Indian food delivery market demographic

The graph below illustrates an index of the monthly users across the three players and
how they stack up against one another from January 2019 to June 2021. It seems that the
pandemic has helped Zomato and Swiggy to improve their user economics and add more
consumers as the frequency to dine out has dropped.

Initially, Zomato has always taken the lead before the onset of COVID-19. However, our
data says that Zomato suffered a huge drop in users when the first lockdown began, and
more than 95% of restaurants suspended their services.

Also, Zomato acquired Uber Eats in January 2020, and there may have been some
handover friction (we suspect some users may have switched to Swiggy). After the
lockdown ended in May 2021, we noticed that online deliveries picked up again as
restaurants resumed their services, and the frequency of dining out dwindled.

45
#6. Indian Food Delivery Monthly users index

Source: measurable.ai

Transaction volumes and the impact of COVID-19

The impact of COVID-19 has evidently damaged delivery volumes for most online
platforms. From our consumer panel, Zomato has always taken the lead in order volumes,
but during the abrupt nationwide lockdown, they experienced a 70% sharp decline in
order volumes, along with a massive drop in users.

The lockdown also resulted in an exodus of migrant workers from the big cities to their
hometowns. Don’t forget that these migrant owners form the bulk of the delivery fleet for
online food delivery operators in India. As such, it was inevitable that when the lockdown
was lifted, the delivery operators would face a supply problem and would need time to
get things up and running again.

Lastly, unlike the US and Europe, where the alternative to dining-out is primarily
delivery, in India, the alternative can be either delivery or cooking at home. Cooking at
home was particularly favored in the early pandemic days, as a delivery boy from one of
the major delivery operators tested positive for COVID-19—this hurt consumer
sentiment and trust in the safety of food delivery operators.

46
#7. India Food Delivery Monthly Orders Index

Source: measurable.ai

As illustrated above, it was not until September 2020 that the food delivery volumes
returned to 60–80% of the pre-COVID-19 time. Volumes have picked up on the back of
stringent safety measures put in place by delivery operators to win back customers’ trust.
Due to a decreased customer base, delivery operators have also tried to venture into
adjacent categories like grocery, pharma, and alcohol delivery.

What might be surprising is that Swiggy is slightly leading Zomato in terms of order
volumes post-COVID-19. Why is this so? We dive into our data and realize that this is in
parallel with Swiggy’s delivery fees being lower—sometimes free—and more aggressive
than Zomato’s post the lockdown period.

47
#8. Which app is more popular?

Source: measurable.ai

When it comes to app popularity, we noticed that before lockdowns, Zomato dominated
the market with over 70% of users in the online food delivery market. On the other hand,
Swiggy and Uber Eats had a combined market share of less than 30%. There seems to be
little overlap in the user base among the players.

Post lockdown, Swiggy seems to have emerged stronger with roughly the same market
share as Zomato. In Q1 2021, Swiggy and Zomato shared roughly 13% of the same user
base.So why and how did Swiggy suddenly emerge so victoriously right after the
lockdown? As mentioned above, we believe this has to do with Swiggy lowering its
delivery fee more aggressively than Zomato.

In terms of payment methods, for Zomato alone, we noticed that post-COVID-19, more
people are choosing to pay online via the app as opposed to using cash. Particularly in the
second wave of infections between April and May 2021, there was a rapid increase in
online payment methods in lieu of cash.

48
Chapter - Ⅴ
Findings,
Conclusions,
Suggestions.

49
5.1 Conclusions

Ø 1. It has become a lot simpler to order your favorite dishes from restaurants. In the past
five years, restaurant deliveries have bloomed by 20%. In addition, sales of online food
delivery will grow to $220 billion by the year 2023. This will account for nearly 40%
of restaurant sales. Yes. Food deliveries will continue to grow.
Ø 2. Yes. Food delivery is a fast-growing industry. The advent of food delivery apps has
increased the speed and accessibility of obtaining your favorite foods. Now you can
order your favorite food from the restaurant downtown and have it delivered to your
front door.
Ø In addition, online delivery platforms are also increasing customers’ convenience and
choice by offering tempting discounts and deals. With a mere tap on the app, customers
may order from any restaurant.
Ø According to a global market report on online food delivery services, this market is set
to expand to 154.34 billion USD by 2023. In the United States, the food delivery
industry is driven by high-income earners who don’t get time to cook meals at home
and hectic work schedules.
Ø 3. As per the results of a survey on Indian food delivery apps conducted by Rakuten
Insight in August 2021, Zomato was the most popular food delivery application. The
second popular food delivery app in the country was Swiggy.
Ø 4. Economic factors such as GDP growth, increase in disposable incomes, increased
internet and smartphone penetration.

• Consumer behavioral changes such as reduced time available for preparing meals at
home to fast- paced urban lives, young working people replacing home cooked food
to delivery subscription meals (home-style food).

• Regulatory policy changes such as increased delivery costs due to stringent labour
laws; and increased minimum wages. This could lead to an increase in selling prices.

• Market forces such as the emergence of new aggregator- deliverer players (such as
Amazon and Pace); potentially reduced levels of investment in existing aggregators.

Ø 5. When it comes to app popularity, we noticed that before lockdowns, Zomato

dominated the market with over 70% of users in the online food delivery market. On
the other hand, Swiggy and Uber Eats had a combined market share of less than 30%.
There seems to be little overlap in the user base among the players.

50
 Post lockdown, Swiggy seems to have emerged stronger with roughly the same market
share as Zomato. In Q1 2021, Swiggy and Zomato shared roughly 13% of the same
user base. So why and how did Swiggy suddenly emerge so victoriously right after the
lockdown? As mentioned above, we believe this has to do with Swiggy lowering its
delivery fee more aggressively than Zomato.
Ø 6. With the arrival of online food delivery platforms like Swiggy and Zomato, the
demand for online food delivery has increased. According to Data Labs by Inc42, the
food ordering market of India is expanding at a CAGR of 16% to reach $17 billion by
2023. The projected market size of cloud kitchens is expected to reach $1.05 billion
by 2023.With the digital shift of all the services, people have started preferring online
platforms. So is the case with food. They have no free time to walk down to a restaurant
or drive-in jam-packed traffic for food. And this problem has been beautifully solved
by the food delivery service providers.
In the coming future, Cloud kitchen will transform the way we dine. The reason for its
growth is that the number of risks is comparatively lower. The monetary constraints
can easily be dealt with as the demand for the digital platform lowers the operational
cost.
Ø 7. In the United States, the food delivery industry reached 18.5 billion USD in 2020.
By the year 2026, this figure is expected to hit 33.7 billion USD, at a continued annual
growth rate (CAGR) of 10.5%. This growth is bolstered by user-friendly apps, growth
in urban areas, and innovations in food delivery services, i.e. use of drones, robots,
and self-driving cars.
Findings Results

1. Price is a relevant factor in choosing the online yes

food delivery company.

2. Service quality is a relevant factor in choosing the yes

online food delivery company.

3. Attitude of delivery person is a relevant factor in yes

choosing the online food delivery company

4. Menu is a relevant factor in choosing the online yes

food delivery

51
5.2 Suggestions

While the popularity of the food delivery business is on the rise, its success and equity
will largely depend on how robust their tracking system is, since a lot would depend on
the last-mile delivery. We have fleshed out the parameters to illustrate why such a robust
system is the need of the hour.
Ø Guaranteed secure deliveries
When all the food delivery companies are busy wooing customers, a small error in
losing or misplacing a package can cause huge damage in reputation leaving the irked
customer to badmouth. However, real-time tracking can come handy to ensure the
safety and traceability of the parcel that leaves the kitchen. Also, customers will be
able to understand the reason for the delay based upon the location of the package by
improving the options for tracking the carriers automatically offering a warranty for
safe delivery. Having a local warehouse at every delivery point is essential to ensure
the safety of the products while they are in storage.
Ø Enhancing route planning
Optimizing the route of delivery is important as it makes the process smooth. Route
management software helps to analyze designated routes and offers an optimized
solution to the designated driver. This results in a reduction of delivery time and costs
to a certain extent. With the support of this technology, drivers feel more relaxed while
delivering food parcels, and makes the process quicker than expected. Special
algorithms automatically assign the best driver suited for the specific route to ensure
faster processing.

Ø Enabling Automatic Dispatch

Through real-time tracking software, the products can be automatically dispatched with
minimum manual intervention. The software automatically assigns the driver and
delivery agents for every single package using a specific algorithm. From the dispatch
till delivery, the entire operation is processed through these algorithms to maintain
speed. During the current pandemic condition, this particular process helped practice
social distancing. This system also allows the customers to know the date and time of
delivery beforehand along with further information on the delay if any.

52
Ø Gain Better Control via Tracking
The online tracking technology allows consumers to receive their packages on time
and communicate with the delivery agent if necessary. Tracking and tracing are an
essential part of last-mile delivery services. It also helps to manage the routes and
creates batch delivery systems automatically without any manual intervention. This,
in turn, will speed up the process, and they are particularly useful when there is a lack
of employees during certain situations.

Ø Quick Customer Feedbacks

• Customer feedback is important and hence some of the real-time tracking software
offers this facility. This feedback data is further analyzed and used in service
enhancement of companies to get more traction. Voice of the customer can actually
point out the flaws in the system.
• Actually, these latest technological interventions are essential which can connect
the carrier, delivery agent, clients, and brands. These techniques are a part of the
development involved in the last-mile carrier technology which will eventually
deliver foods faster and increase customer retention, followed by huge brand equity.
• Yes. Food delivery is a fast-growing industry. The advent of food delivery apps has
increased the speed and accessibility of obtaining your favorite foods. Now you can
order your favorite food from the restaurant downtown and have it delivered to your
front door.
• In addition, online delivery platforms are also increasing customers’ convenience
and choice by offering tempting discounts and deals. With a mere tap on the app,
customers may order from any restaurant.
• According to a global market report on online food delivery services, this market is
set to expand to 154.34 billion USD by 2023. In the United States, the food delivery
industry is driven by high-income earners who don’t get time to cook meals at home
and hectic work schedules.

53
Bibliography

54
WEBSITES REFERRED:

• https://www.zomato.com/
• https://www.swiggy.com/
• https://blog.ipleaders.in/acquisition-by-zomato-of-uber-eats-
analysis/https://www.bringg.com/blog/delivery/food-delivery-industry-trends/
• https://www.moneycontrol.com/news/business/earnings/zomato-q2fy22-results-
loss-widens-by-87-to-rs-430-crore-revenue-surges-to-rs-1024-crore-
7704411.html
• https://startuptalky.com/future-cloud-kitchen/
• https://productmint.com/the-food-delivery-business-model-a-complete-guide/
• https://kr-asia.com/who-leads-the-food-delivery-race-between-zomato-and-
swiggy-in-india
• https://www.moneycontrol.com/news/business/inside-olas-plan-to-crack-the-
food-and-grocery-delivery-market-again-7649021.html

55