MENA Food Delivery Ecosystem is rapidly evolving. While food aggregators helped restaurants weather the pandemic, their impact on the profit margins has been reduced. Restaurants are creating own unique propositions to attract consumers and consecutively restaurant own apps are now the fastest growing segment. Evolving stakeholder economics is poised to reshape the food delivery market in the coming years 

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How can restaurants sustain in
the evolving food service
industry?
November 2022

2. 2
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Food delivery is large and growing segment
UAE Food Service Market
In %, USD Bn, 2019 - 2027(F)
Food Delivery Market
Source(s): Redseer Primary Research and Analysis
~50% of the D2C e-tail sales come from D2C - Omnichannel brands
in 2021
Growth drivers
• Digitally Mature- Booming digital ecosystem witnessing
high adoption of fintech products and services
• Consumption-based- High consumption nation with PFCE
being ~50-60% of the GDP
• Urbanised- Highly urbanized and Tech-savvy population
• High adoption- Spike in adoption due to restricted mobility.
Quick delivery has become the key decision criteria for
consumers
• Going ahead other Q-commerce categories will drive the
market growth
Macro
Factors
Consumer
Demand
Online channel continues to drive the market in coming years
2027
2018
16
2021
Food Delivery
Offline
26
+6%
17%
4%
Xx% CAGR (2018-27)
Supply
Ecosystem
• Disruptive business models- Innovative business models
such as cloud kitchens, click and collect are gaining traction

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Food aggregators have played a major role in changing consumer behavior
towards delivery
Source(s): Redseer Primary Research and Analysis
1. What are the top 3 important criteria for ordering food?
Key Decision Criteria1 for Food Delivery
% of Rank 1 mentions, 2019-22
Service Features
3
“Most of the times, I decide
to shop online because of
better product variety and
discounts”
Housewife, Abudhabi
“Discounts/Deals are no
longer important to me, more
than that I prefer quality
experience and quick
delivery”
Businessman, Dubai
Pre-Pandemic
“I order products online only
if there is high
discounts/deals are going on
or the product that I want to
buy is not available in the
offline store”
Student, Dubai
Service Features
3
Delivery Experience
5
During Pandemic
Product Features
1 Product Features
1 Service Features
1
App Experience
4 Delivery Experience
4 Product Features
4
App Experience
3
Discounts/Deals
5
Discount/Deals
2
Discount/Deals
2 Delivery Experience
2
Post-Pandemic
App Experience
5

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Restaurants have increasingly relied on food delivery; however, margins have
been under pressure
Restaurant Net Profit Margins
In %, 2022
Source(s): Redseer Primary Research and Analysis
Food aggregators have boosted the restaurants
revenue by almost 2 times…
Restaurant Revenue
USD Mn, 2022
Without Delivery With Delivery
+2x
Without Delivery With Delivery
…However, the net profit margins got impacted heavily
Heavy marketing spending to increase
visibility
High commission charges No access to consumer data
Exclusivity requirements by few food
aggregators
No Control over Delivery Experience
Lack of customer support from
aggregators
Restaurant Challenges while using Food Aggregator platform
Descriptive

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As many restaurants are going direct…
Source(s): Redseer Primary Research and Analysis
• Rapid growth of new sectors
• Surge in own restaurant apps
• Innovative business models
• Stabilization of business
models
• Increase in Customer
Stickiness
Recent Developments Expectations
• Mega funding in food-tech kickstarts sector growth
• Growing verticalization of the market
• Rapid consumer adoption
Past Evolution
Food
Delivery
Market
Consolidation Phase
2019 2027(F)
Nascent Phase
2009
Disruption Phase
2021
Initial Growth Phase
Most of the food
aggregators have
entered during this
phase
Pandemic has given
the significant thrust
to sales
Uber Eats exited in
mid 2020
Food Delivery Market Evolution
2015

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…and “restaurant own app” is now the fastest growing segment
Growth Drivers
Source(s): Redseer Primary Research and Analysis
Food Aggregators-
• Large variety and speed of delivery
will drive the demand for Food
Aggregators
Own App-
• Ease of ordering, better consumer
experience and higher order
accuracy will drive the demand for
own apps
Call/Messaging Channel-
• Restaurants are reducing their
reliance on call centers and are
moving towards digital services
1
2
3
UAE Food Delivery Market
In %, USD Bn, 2018 -2027 (F)
Food Delivery Aggregators have driven the rise in food delivery adoption over the last 2
years; Restaurant's own apps to see strong growth as well in future
2027 (F)
<10%
2018
~20%
2022
Restaurant Own App
Food Aggregator
Call/Messaging Channel

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Restaurants are creating unique propositions to attract consumers (low
delivery fee, better discount, pickup option, loyalty programs, etc)
Source(s): Redseer Analysis, Desk Research
Consumer needs resolved by Food Delivery platforms
Descriptive
Consumer Needs
Food
Aggregator
Restaurant
Own App
Calling/
Messaging
Challenges/Benefits for restaurant own app
Quick Delivery Lack of scale in terms of driver fleet size impacts delivery time
Convenience
(Delivery at Door-step, low waiting
time, late night availability, etc.)
Inferior tech impacts location determination capabilities and
delivery time
Low Delivery Fees
Low delivery fee because of some delivery cost burden borne by
restaurants
Discounts/Deals
Better cost efficiency encourages restaurants to offer
discounts, coupons & cashback offers
Cuisine/Restaurant Variety Limited variety but availability of high demand fast foods
Multiple payment options
Variety of digital & non digital payments integrated with the
online platforms
After-purchase service
(complaints, refunds, etc.)
Standard customer support complaint resolution & refund
processes
Bulk Ordering Lack of bulk ordering mechanism
Additional Services
(Click & Collect, Drive Thru, etc.)
Option of pickup services, health related information, etc.
Loyalty Program Better rewards through loyalty program
Fully solved
Limited solved
Unsolved
Consumer
Needs
Significance

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What restaurants should do next in the evolving food service industry?
Source(s): Redseer Primary Research and Analysis
Size
Target Segment
Aspiration
Food / Product
Loyalty
Restaurants differentiated by
following features …
… should make strategic choices accordingly
1. Direct Channel Vs Food Aggregator
2. Shop-Front Vs Cloud Kitchen
3.
Internal Capability
Building
Vs Outsource Capabilities
4. Single Brand Vs Multi Brand
5. Own Outlets Vs Franchise Model
Restaurant Classification Strategic Choices

9. 9
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Authors
Sandeep Ganediwalla
Partner
Akshay Jayaprakasan
Associate Partner
Abhishek Rajput
Senior Consultant

10. 10
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Project Team
Milli Saklani
Business Analyst
Nikhil Harikumar
Business Analyst
Sushri Padhi
Business Analyst

11. 11
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Source(s): Consultancy Middle East
Top strategy consulting firms in the Middle East
Top e-commerce consulting firms in the Middle East
Top retail consulting firms in the Middle East
Top private equity consulting firms in the Middle East
Platinum Consulting Firm Pioneering the METAP Digital Economy
About redseer - Industry Pioneer in the Middle East

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