Competition, demand, changing behaviour make food delivery the new normal

• Large market ready for more game-changers
• Service quality is important for sustainability

TECHNOLOGY has changed human behaviour in more ways that we can imagine, aiding humans in everything, from waking up in the morning and getting work done to getting meals and providing entertainment.

Food is an important part of people’s lives in Southeast Asia; meals are traditionally social affairs. But in this day and age, the time and effort that people are willing to spend getting meals is limited.

This is where technology comes in – providing access to food delivery systems and, in the process, changing the modern human’s behaviour.

Growing market

The food delivery market in Southeast Asia is huge – the food market itself is a trillion dollar one and the delivery market is only a small fraction of this. There are numerous service providers that run on all kinds of business models, and there is still room for many more.

As with any good startup, food delivery startups typically begin by identifying and solving problems in the food and food delivery market. This is what now-large marketplaces Delivery Hero and foodpanda did, as well as still-growing Malaysia-based startup Delivereat as well as Mammam and Dah Makan, which operate on a centralised food production and delivery model.

Growth in this industry is healthy despite, or perhaps because of, the competition. foodpanda, for example, managed a 400% growth year or year for the last few years in Singapore despite Ubereats and Deliveroo entering the market.

“Without competition, foodpanda wouldn’t be able to play in the high leagues. None of our big growth would be possible without new companies constantly entering the market and pushing us to become the best,” says foodpanda Singapore’s managing director Aspa Lekka (pic, above).

She adds that the more companies there are competing for market share, the better the ecosystem is for educating customers about food delivery.

However, while CEO and co-founder of Dah Makan Jonathan Weins, agrees that traditional food delivery and marketplaces have educated the market and have made food delivery common behaviour, he believes that there are still many fundamental problems that have not been solved.

In Southeast Asia, the majority of food delivery is confined to fast food as this is what the mass population is familiar with. Weins says that outside of fast food, delivery costs and service fees make food delivery expensive for the average consumer, and disappointing in terms of food quality.

“All this provides plenty of opportunity both in terms of offering non-fast food choices as well as removing the existing friction in the food delivery experience,” he says.

Regular food delivery service user Nadarajah Sivalingam (pic, right), CEO of an online publishing startup in Kuala Lumpur, echoes this sentiment, saying that modern food delivery services certainly provide consumers more variety and free them from monotony of fast food.

However, while startups such as Dah Makan and Mammam, and restaurants that are jumping onto the food delivery train are starting to fill this gap, there is much more space available for growth in this niche.

Value

Consumers use food delivery services for a variety of reasons but, unsurprisingly, the most common seems to be the need for quick and convenient meals during or after a busy work day.

The various food delivery services available take away the need to think about and plan meals, whether the consumer is preparing the meal himself, going to the restaurant and dining in or going to the restaurant and buying food to bring back to the office or home.

Food delivery services have changed consumer behaviour so much – especially urban consumers – that using them has become normal and routine. foodpanda has seen more and more people turn to food delivery in recent years because of the current pace of life as well as the opportunity to discover more restaurants that food delivery offers, which is a trend the modern foodie follows.

Tan Pei Lyn, a professional living and working in Singapore, says that food delivery services are a convenient option during a busy work day in the city; using Singapore-based food delivery startup Grain, for example, allows her to have fresh and healthy food at her desk while continuing to work.

Another young professional in Singapore, Lim Xiao En (pic, right), says she generally uses food delivery services after a long day: “I usually finish work very late at night and all I want to do is go home and relax instead of spending a few more hours out waiting for food or travelling to and fro just to get a bite to eat.”

Both Lim and Tan are regular uses of Foodpanda and Deliveroo, while Lim also uses Ubereats and Tan uses Grain.

Nadarajah, who uses Foodpanda, Dah Makan and Mammam, uses food delivery for power lunches and for supper or snacks during impromptu get-togethers with friends.

“I still go out for dinner to restaurants with my family because it’s an experience. But we use food delivery during get-togethers so that we don’t have to go out to buy food, which would disrupt our activities,” he reveals.

Lekka says that more food delivery behaviour does not mean that the number of dine-in customers has dropped. “Our partners see a growth in their dine-in business too. I assume this means that people nowadays prefer to eat out or order home instead of spending their time cooking,” she says, adding that with so many great options available and the possibility of having your food within a reasonable time makes food delivery a good choice.

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