Online food tech industry saw a 150% in order volumes in 2016 despite a funding squeeze and multiple players scaling down their operations or shutting shop, according to a new study.
After a heady 2015, Food tech sector was one of the worst affected sector in the funding slowdown last year. The sector received less than $80 million in 2016 as compared to $500 million funding in the year before, indicating the low investor sentiment in the sector, as per the study done by RedSeer Consulting.
Despite this scenario, online food delivery is now reportedly accounting for 30-35% of the total business for partner restaurants (i.e. restaurants associated with online delivery platforms) who were covered in this study.
“With customers and restaurants both embracing these online food delivery services, the order volumes have shown a healthy growth but the fundamental issue of unit profitability and operational efficiencies need to addressed to build a sustainable business in this sector” said RedSeer Consulting founder and CEO Anil Kumar.
It added that more than 80% of orders are now coming from the top five cities in India, due to which established players have limited their expansion to newer markets and are now are focusing on achieving operational efficiencies and profitability in these cities. Several Internet kitchens have also come up with niche offerings in these cities.
Prominent players in this space include Sequoia Capital and Info Edge-backed Zomato, Bessemer Venture Partners-backed Swiggy and Lightspeed & Zodius Capital-backed FreshMenu.
In December, Delivery Hero acquired Rocket Internet’s FoodPanda in an all share deal. Last month, Uber announced that it is expanding its on-demand food delivery app UberEATS to India in the first quarter of this year.
Source: ET Tech
