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Challenges Faced by the Growing Food Delivery Market

By Nammitta Dutta 26th March 2019

The world is changing rapidly. To cope with that, industries are also changing according to customer demands. Everyone wants everything to be cost-effective, faster, and easily accessible.

Getting services like food, medicine, clothes, and anything else you can think of at your doorstep within hours was considered daydreaming a few years back. Today, the scenario has changed and food delivery is leading in the race of the on-demand world.

Teenagers are shifting their inclination from traditional dining out to different on-demand food delivery services like Pizza Hut, Dominoes, and Papa John’s. The online presence of a wide range of restaurants and the option to pay online in a single tap has made lives easier! More or less, digital technologies are rapidly changing the food delivery industry. When it comes to online food delivery services, the food industry is seeing exponential growth.

The Growing Food Delivery Market

Today, the global food ordering and the delivery market is worth approximately €95 billion, or 1 percent of the total food market and 4 percent of food sold through restaurants and fast-food chains. It is growing rapidly in most countries, with an overall annual growth rate estimated at just 3.5 percent for the next five years.

Growing Food Delivery Market

Currently, out of the total traditional food ordering market, 47% is offline while 53% is conducted online. This figure is expected to flip in the next couple of years. Overall, this sector is growing at an annual rate of 3.7%, but interestingly, online food ordering, and the delivery sector is expected to grow at 15-20% during the same period.

The food delivery industry is expected to have a market volume of $146,654m by 2022. The largest segment of the food delivery market is restaurant-to-consumer delivery with a market volume of US$58,008m

There has been tremendous growth in the online food delivery sector in the past few years and is expected to grow at a rapid pace in the coming few years.

Setting up delivery operations isn’t a simple feat, but it can bring unimaginable success to your restaurant chain – a completely new revenue stream that serves new customers and delights existing ones.

Though the online food delivery market offers an immense commercial potential, it also presents some major challenges.

Challenges Faced by Online Food Delivery Apps

  • Wavering Customer Loyalty

In this digital era, fidelity means the most to customers. The more choices you give to your customers, the more spoilt they get. For customers, “The more the merrier” is the success mantra. Businesses who don’t focus on maintaining their customer base are bound to face bitter consequences. Customers love it when they are treated to exclusive deals, freebies, and incentives. Making customers feel special will earn you their loyalty.

  • Fluctuating Pricing Model

The food delivery industry has become very competitive, adopting a price model that doesn’t continuously fluctuate and push sales is really challenging. Small businesses and the local sellers play at a lower margin than the big names in the market. Even in the case of well-settled restaurants, there is no guarantee of a hike in sales even after cutting the prices, as customers are always wishing for some more.

  • Inconsistent Food Quality

It is a challenging task to maintain the quality of food being delivered at customers’ door-step. There is no comparison of the quality food delivered on tables in the restaurant with the food delivered in a box in the name of instant home delivery. Food is always prone to quality lapse irrespective of the measures taken in packaging to provide first-class food delivery to their customers. There’s a major probability of pizza becoming cold, curry might spill, noodles turn sticky while sandwiches get moist. The customers equate the quality of food served in restaurants to the quality of delivery.

  • Inability to Cope With Volumes

In this digital era and tech biz world, where everything is available with a single tap, food delivery is becoming more and more popular with every passing day. For instance, let’s say that a particular food delivery service has gained prominence. So, the demand is increasing and orders keep coming in. But do the restaurants have the capability to manage such big operations and logistics for delivering orders without interrupting the walk-in orders in time?

  • Arrival of Bigwigs

Looking at the great potential in the food delivery market, flourished companies are already stepping into the industry. Big names like Amazon and Uber are all set to compete for the market with Amazon Restaurant and UberEats respectively. Old players of the food industry like Pizza Hut, Starbucks, and McDonald’s are popping up in the competition too. They have existing financial & operational resources required to meet market demand as well as combat the competition coming their way. It is difficult for smaller and independent food delivery setups to retain their position in the market.

The future of the food delivery industry is evidently very bright and full of opportunities to grow. Delivery giants must combat the hindrances coming their way to survive the immense competition. Keeping these facts in mind it is necessary to have a smart and fully equipped food delivery app to manage deliveries hassle-free.

JungleWorks is one such suite providing all the best-in-class features to sustain a business in the highly competitive food delivery market.

To Know More About JungleWorks and Food Delivery App Click Here

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