Large foodservice chains have always had an advantage over smaller operators in terms of brand visibility and delivery. However, the advent of food delivery platforms has significantly altered the competitive dynamics in the foodservice sector. The COVID-19 pandemic gave a fillip to the food delivery business, and they have been able to sustain consumer interest. Thanks to this, smaller foodservice operators can now access a larger consumer base without having to invest in logistics infrastructure and compete with large brands, says GlobalData, a leading data and analytics company.
Bokkala Parthasaradhi Reddy, Lead Consumer Analyst at GlobalData, comments: “Large foodservice chains have an edge over small and local operators. The large chains’ high visibility due to branding and advertisement spend helps them have a higher brand recall among consumers. In addition, the larger chains have established loyalty programs that help them engage consumers better. Delivery also plays a key role in attracting consumers, especially among quick-service restaurants (QSR). This is one of the reasons for the Domino’s brand’s leading position across most markets. However, the advent of food delivery platforms is eating away into these advantages, especially the delivery advantage.”
Deepak Nautiyal, Consumer and Retail Commercial Director, APAC and ME, GlobalData, notes: “Food delivery platforms such as FoodPanda, Grab, Swiggy, and Zomato have revolutionized food delivery in a short span of time. Their penetration is increasing even in Tier-2 cities and have become must-have apps for most urban consumers. These apps enable smaller operators to have more visibility and vie for consumer eyeballs. In addition to upending the food delivery space, these apps are also changing the business models of small operators.
“Smaller restaurants are encouraged to adopt new technologies to enhance their service offerings. This includes improving their digital ordering processes and leveraging social media for better customer engagement. The delivery platforms are also enabling foodservice operators to scale their delivery capabilities without investing heavily. This strategy not only saves costs but also enhances service efficiency by leveraging the expertise of established delivery platforms.”
Reddy adds: “The popularity of food delivery apps aligns with the 40% of respondents in a GlobalData’s consumer survey, who stated that they are ordering from food delivery apps^. This percentage increases further to 48% for the 25–34 years cohort, who are more attuned to digital lifestyles and are comfortable in ordering online. Delivery platforms are also catering to this age group by adding more choices.”
Nautiyal continues: “Apart from smaller chains, large multinational chains are also benefiting from food delivery apps. While they continue to retain their own apps, loyalty programs, and delivery solutions, larger chains are increasingly gaining orders from delivery platforms as they offer a one-stop solution for consumers. The chains are also expanding their discounts to food delivery platforms as it helps reduce their investment in delivery infrastructure.”
Reddy concludes: “Given food delivery platforms’ benefits to consumers and foodservice operators, their appeal is increasing by the day. Both large and small operators are benefiting from their popularity among consumers. While issues such as higher prices and increasing platform fees are the major challenges, it is a win-win situation for all the stakeholders.”
^GlobalData 2024 Q3 Consumer Survey – Asia & Australasia, published in October 2024, with 6,471 respondents
