Co-editor, Peter Backman is a long-time guru of the foodservice industry and founder of theDelivery.Worlda platform that connects the delivery sector and makes understandable the myriad changes and challenges affecting the sector worldwide.
As we approach the middle of the year, the global restaurant delivery market is showing promising signs of growth and profitability. With most delivery companies having released their half-year results, we can now assess the current state of the market and its future development.
The entire restaurant delivery market (plus fast food) achieved sales of around US$250 million in the first half of the year, representing growth of 20 percent year-on-year. This growth has accelerated significantly compared to the previous year’s figure of 15 percent.
Europe accounts for 25 percent of the global market, North America 35 percent, and the rest of the world the remaining 40 percent. However, growth has not been consistent across all regions. The North American market has seen significant growth, with a 20 percent increase in the January-June period compared to last year. In Europe, growth has accelerated after a two-year period of slow growth, including a decline in the second half of 2023. This rebound has been driven by significant marketing spend by aggregators, funded by posts from restaurants on their platforms.
Growth in the rest of the world has been consistently strong in recent years, ranging between 20 and 25 percent. This region, which includes various markets from the Far East to South America and Africa, is well positioned for above-average expansion. The growing middle classes in these regions are increasingly interested in meal delivery, which will drive market growth and price increases, paving the way for profitable expansion.
Profits, measured by EBITDA, have increased across all platforms over the past two years. UK-based Deliveroo reported gross profit of 10.4 percent of GTV, a level that is now the industry norm. Adjusted EBITDA rose 57 percent year-on-year in the first half of 2024, coming in at 1.7 percent of GTV, also in line with the industry norm. Free cash flow, which is closely linked to EBITDA, was also positive during the period.
What was remarkable, however, was the company’s net profit of £3.2 million – a rarity in the industry.
Nevertheless, the trend in profitability is upward for all reporting companies, despite occasional dips. Adjusted EBITDA data for all restaurant delivery services shows a promising development, and although these figures do not focus exclusively on restaurant delivery, this channel remains the most important for all reported figures, even as other industries such as grocery retail are gaining importance.
Gross profit has declined slightly over the past two years, mainly due to the increasing sales and marketing costs needed to stimulate demand in a rather sluggish market environment, particularly in Europe. However, the four-year trend is pointing upwards and demand is growing again, partly due to expansion into newer vertical markets.
Looking ahead, the numbers suggest a path towards long-term net profitability in restaurant delivery, although not all delivery models and platforms may achieve this. The global outlook for restaurant delivery is optimistic, with accelerating growth and improving profitability. While we await H1 2024 numbers from top-selling delivery companies such as Delivery Hero, Meituan and Ele.me, current data suggests a market poised for sustainable growth and profitability.
The restaurant delivery industry is entering a new phase of growth (with GTV it could reach £470 million) and becoming profitable, driven by expanding markets, increasing demand and strategic investment. The global outlook is positive and the industry is well positioned to capitalise on new opportunities.
