Following the news that Zomato has launched a new inter-city food delivery service ‘Intercity Legends’;
Bobby Verghese, Consumer Analyst at GlobalData, a leading data and analytics company, offers his view:
“To reinvigorate its food delivery business, Zomato is experimenting with new value-added services by leveraging its existing delivery fleet. The launch of a 10-minute delivery service in April 2022 and the pilot launch of the ‘Intercity Legends’ are in line with this strategy. With a decline in daily COVID-19 cases, and the rollout of the booster vaccines progressing smoothly, Indians are regaining confidence to leave their homes more often. While spiraling inflation is undermining the spending, the easing of most of the national COVID-19 restrictions has unleashed pent-up demand for out-of-home consumption experiences. Consumers are eager to return to their favorite eateries after a nearly two-year hiatus.
“However, the revival in the dine-in guest count at foodservice outlets is driving a proportional slowdown in the demand for home deliveries and takeaways. The surging inflation levels are also contributing to the slowdown, with consumers curtailing the frequency and quantum of online food delivery orders after restaurants raised menu prices.
“While the number of dine-in transactions is forecast to increase by 16.4% in 2022, the number of food takeaway transactions will only rise by 6.3% in 2022, compared to the 11.7% annual increase recorded in 2021*. This slowdown will manifest as less runtime for the delivery fleet food aggregators such as Zomato and Swiggy. GlobalData also forecasts that the overall transaction value of food takeaway will only grow by 6.9% in 2022, against a 9.2% increase in the total dine-in transaction value*.
“However, as consumers shell out more for these services, Zomato will be able to raise its average value per transaction — a key benchmark of its food delivery business. This signals that the company is ready to leave behind its earlier ‘by the numbers’ game to a premium play for the long-term.”
*GlobalData Foodservice Intelligence Center—Market Analyzers, accessed in September 2022
