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Kasikorn Research Center assesses the food delivery market in 2024 as a downward trend, as people return to dining in more and food prices in applications rise.
On February 5, 2024, reporters reported that the Kasikorn Research Center estimated that in 2024 the value of the Food Delivery market would be approximately 86 billion baht, or a 1.0% contraction from 2023, even though the average cost of ordering food per time is likely to increase (Price per Order) by approximately 2.8% from the average in 2023, or an average price of approximately 185 baht per time of ordering, which will result in both the number of times and the volume of orders decreasing.
In 2024, it is expected that the volume of food orders via applications or Food Delivery will decrease by approximately 3.7% from 2023 as a result of 2 things:
- The need to order through apps has decreased as consumers return to dine-in restaurants, following the shift away from home, and most return to work for a full week.
According to a survey by the Kasikorn Research Center, although almost all respondents (94%) believe they will continue to use food delivery services, 48% of the sample group believe they will order less food, an increase from the survey results in June 2023.
Meanwhile, new customer signups have slowed, as reflected in LINE MAN’s declining signup index, as most consumers already have sufficient access to this food delivery service.
Platform providers are therefore employing strategies to expand their customer base by expanding their service areas in the provinces, such as in secondary tourist cities, adding new services, and expanding their revenue streams, such as increasing discounts on ride-hailing services, dining discounts at partner restaurants, and establishing cross-business partnerships.
- The average food price in the app has increased, affecting the order volume. This is a result of high accumulated costs, forcing restaurants to increase prices both in-store and in the food delivery application.
Restaurant businesses have faced rising operating costs, including utilities, labor, raw material costs, and financial costs. This has forced operators to raise food prices. In 2024, average food prices are expected to increase by approximately 2.2%, following an average price increase of approximately 5.7% in 2023. This aligns with a Kasikorn Research Center survey, which found that ordering food from apps has become more expensive.
The Kasikorn Research Center states that one option to address the rising cost of food ingredients is to implement efficient inventory management technology, enabling restaurants to improve their purchasing and inventory management, using real-time data.
The promotional campaign has slowed down from the previous period as platforms shift their focus to profitability after recording accumulated losses.
Currently, the cost of doing business for Food Delivery application providers has increased, causing the flexibility in marketing by reducing GP fees (the average GP collected is around 30%) and including discounts on delivery fees to be limited.
However, it is still evident that food delivery application providers are adapting their marketing strategies to be more selective rather than mass marketing as in the past. This involves marketing with popular restaurants or those with high volumes of orders, such as organizing food discount campaigns when a certain amount is purchased.
This includes utilizing a Subscription Model, which enables orderers to save on delivery costs, as well as offering discounts or waiving fees for using other services within the application, such as ride-hailing and package delivery, to reach target customers.
The food delivery market is expected to shrink slightly in 2024.
Kasikorn Research Center estimates that in 2024, the food delivery market value will be approximately 86 billion baht, a 1.0% contraction from 2023, even though the average cost per order is expected to increase by approximately 2.8% from the average in 2023.
Or an average price of approximately 185 baht per order, which will result in both the number of orders and the quantity being reduced.
The Kasikorn Research Center further stated that although the trend of food delivery has slowed, this channel remains important as many consumers continue to use the service, especially during times of need such as rush hours or when working from home.
Furthermore, this channel is also important for restaurant businesses, which generate a higher proportion of revenue from food delivery than from in-store services, such as roadside restaurants and fast-food restaurants.
Read more at: https://www.prachachat.net/breaking-news/news-1495125