Online Food Delivery Market in India 2023 – 2028

Online Food Delivery Market in India 2023 – 2028

Online food delivery service providers offer prepared meals and food products that are ordered via mobile apps for immediate consumption. The online food delivery market in India can be categorized into two models: aggregators, who receive food orders from customers, and delivery providers, who use restaurant-employed delivery fleets to fulfill these orders.

Market Insights:

The Indian online food delivery market reached an estimated value of INR 581.86 billion in 2022. Forecasts indicate that by the end of 2028, it is projected to surge to INR 3,059.25 billion, expanding at a compound annual growth rate (CAGR) of 30.52% from 2023 to 2028. The market's growth is driven by the swift digitalization and consumer acceptance of online food delivery services in both tier I and tier II cities. This surge is influenced by increased internet and smartphone usage, the rise in dual-income households, particularly with more women joining the workforce, and the rapid lifestyle changes favoring the trend of online food delivery.

Market drivers:

The expanding number of smartphone users and the growing prevalence of internet access are fueling the demand for mobile app-based food ordering services in India. While initially popular in tier I cities, the concept of online food ordering and delivery is gradually gaining traction in tier II cities. This simultaneous rise in acceptance and the use of food delivery mobile apps in both tier I and tier II cities across India is fueling market growth. Numerous online aggregators have formed partnerships with restaurants to offer combo packages and single-serving meals, all designed to attract customers.

Market challenges:

Extending beyond tier II cities presents a challenge due to the dominance of unorganized players in India's online food delivery market. Aggregators and organized delivery partners find it difficult to compete with local food vendors, particularly in terms of pricing, as these local vendors operate with minimal overhead costs, often disregarding hygiene, safety, and quality standards. Food delivery platforms have not only raised delivery fees but also increased the costs of their loyalty programs and imposed stricter rules for order cancellations. These factors have impeded the growth of the online food delivery sector.