Sweet news for food delivery companies; volumes up, order values too

BENGALURU: Customers ordering food online are spending about 25-30% more per takeaway, even as overall volumes continue to recover, touching about half of pre-Covid-19 numbers, according to food delivery platforms, restaurants and analysts.

The recovery in order volumes, coupled with increase in order value, has led to overall sales bouncing back by 60-65%, they told ET.

The rise in order value is because larger quantities are being ordered with many families working from home, online food delivery platforms Swiggy and Zomato said.

Other reasons for the increase include sustained intent by consumers to buy from known brands with a set hygiene protocol, as well as the launch of home-delivery by many premium restaurants who were earlier strictly dine-in.

Some of the growth is also attributed to promotions and discounts making a comeback.

The ThickShake Factory, for instance, has managed to open only about half of its network of 110 stores, but has recovered about 35% of pre-Covid-19 sales.

“Initially, the consumers had misinformation around safety of consumption of cold beverages and ice creams. Now people have separated rumours from facts,” Yeshwanth Mocherla, Founder, ThickShake Factory told ET.

The upward swing comes in a quarter where Zomato and Swiggy saw a significant dip in orders to less than 3,00,000 per day in April as restaurant supply and overall customer demand cratered during the Covid-19 induced lockdown.


At its peak in October last year, the sector touched milestones of close to 3.2-3.5 million deliveries a day, but since saw 1-2% steady growth rate, as they rationalized discounts, and the sale of Uber Eats India to Zomato took one player out of the market.

The average order value on food delivery platforms was about Rs 320 pre-Covid-19 and has since increased to Rs 420, analysts said. However, it remains to be seen if this uptick will continue or slowly stagnate, they say.

“We are anticipating this trend to last for another three to six months at least,” a Swiggy spokesperson said.

Restaurants agreed

“Platforms have started discounts from mid-July… As the fear reduces and people start to order, they first go with the most known brand… But after ordering a couple of times…they slowly shift to normal ordering behaviour,” said Karan Tanna, who runs New York Waffles, Starboy Pizza, and Hakka Makka brands.

Premium restaurants here to stay

Premium restaurants and food aggregators both said that the adoption of online delivery was a structural change, and a new category on its own, as most fine dining eateries do not expect footfalls to pick up anytime soon.

In Delhi, popular dine-in restaurants are now contributing about 5% to Zomato’s overall food delivery sales from the city.

“…In a world where change is the order of the day, it has been our endeavour to ensure our patrons continue to enjoy their favourite cuisine through an outreach dining experience in the comfort and safety of their home,” Anil Chadha, COO, ITC Hotels said.


Swiggy has seen a similar uptick from premium restaurants and hotels.

“Some of these hotel chains have tailored their offerings with a delivery-specific menu to ensure that the overall experience is best suited for home delivery,” Swiggy said, adding that over the past few weeks, the company has partnered with close to a 100 luxury properties from hotel chains such as ITC Hotels, Hyatt and The Hilton across major cities.

Smaller cities recover as people migrate

Migration of white-collar workforce to their hometowns, too, has resulted in a change in buying patterns and geographies, platforms said.

According to Zomato, with more and more professionals and students moving back to their families, orders from smaller towns and cities are leading the growth compared to the metros. This upswing is seen more in towns closer to metros. “For instance, Mysuru has seen about 120% rise in order volumes compared to the pre-Covid-19 levels,” a Zomato spokesperson said.

(This story is part of a series of articles in association with Facebook. Facebook has no editorial role in this story)

Sweet news for food delivery companies; volumes up, order values too Sweet news for food delivery companies; volumes up, order values too Reviewed by TechCO on 7/29/2020 Rating: 5

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