Indian food delivery sales hit $300m despite paltry start-up funding

By RJ Whitehead

- Last updated on GMT

Related tags: India

© iStock
© iStock
Online orders grew by 150% last year, despite what appears to have been a difficult year for Indian food delivery startups.

Faced with a funding squeeze that forced several companies to scale down or close, the segment received just US$80m in investment in 2016, compared to US$500m the previous year, according to RedSeer Consulting.

Yet this trimming has worked well for meal suppliers, with online food delivery now reportedly accounting for around a third of all business at restaurants associated with online delivery platforms, in a market worth US$300m.

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 chief executive Anil Kumar.

More than 80% of orders are now placed in India’s five biggest cities, causing established platforms to limit their expansion to lower-tiered markets. But more positively, this situation has prompted them to achieve operational efficiencies and greater profitability in these cities. Several Internet kitchens have also come up with niche offerings in these cities, RedSeer’s report added.

Sequoia Capital and Info Edge-backed Zomato are among the key names in the segment, alongside Bessemer Venture Partners-backed Swiggy and Lightspeed & Zodius Capital-backed FreshMenu.

Elsewhere in Indian food technology, Delivery Hero acquired Rocket Internet's FoodPanda in an all share deal in December, Uber announced that it would expand its on-demand food delivery app UberEATS to India last month.

Related topics: Markets, Industry growth, South Asia

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