Online food delivery still just 11 pc of total food services, shows large untapped market: Report

NEW DELHI: Despite rapid growth in recent years, online food delivery in India still accounts for only about 11 per cent of the total food services market, indicating significant room for further expansion, according to a report by Investec Equities.

The report noted that the share of online food delivery has increased from around 3 per cent in 2018 to about 11 per cent currently, highlighting strong adoption but also pointing to a large untapped market, especially as organised food services continue to scale.

It stated “online food delivery still represents only 11 per cent of total food services, up from c.3 per cent in 2018, indicating significant headroom for further penetration

Online food delivery has emerged as the fastest-growing segment within India’s broader food services industry. The market has expanded significantly from $1.4 billion in 2018 to $9.1 billion in 2024, reflecting a compound annual growth rate (CAGR) of around 37 per cent. Looking ahead, the report added that the segment is expected to grow further to approximately $27 billion by 2030, at a projected CAGR of about 19 per cent.

In Indian rupee terms, the market has grown from Rs 270 billion in FY20 to Rs 790 billion in FY25, and is projected to reach Rs 1.7-2.2 trillion by FY30, implying a CAGR of 17-23 per cent. The report attributed this strong growth to a combination of demand-side and supply-side factors.

On the demand side, increasing urbanisation, rising time constraints, and the growth of nuclear households and younger working populations are driving a shift towards ordering food online. Consumers are increasingly opting for convenience-led consumption, which is boosting demand for delivery services.

Digital adoption has also played a key role. The widespread use of smartphones and the availability of seamless payment infrastructure have made online ordering easier and more accessible for a large number of users.

On the supply side, improvements in the organised restaurant ecosystem, expansion of cloud kitchens, and stronger logistics capabilities have enhanced service reliability and reduced delivery times. This has improved customer experience and encouraged repeat usage.

The report said that as these trends continue, the online food delivery segment is likely to see further penetration in the overall food services market. So, the report stated that while the sector has already seen strong growth, its relatively low share in the total market indicates substantial potential for future expansion as digital adoption deepens and organised food services continue to grow. (ANI)