Contributing editor, Peter Backman is a long-term foodservice sector guru and founder of theDelivery.World, a platform that connects the delivery sector and makes sense of the myriad changes and challenges that affect the sector across the globe.
As we approach the midpoint 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 trajectory.
The total restaurant (plus rapid grocery) delivery market reached sales of approximately $250 million in the first half of the year, marking a year-on-year growth of 20 percent. Notably, this growth has accelerated from the 15 percent recorded a year ago.
Europe accounts for 25 percent of the global market, North America for 35 percent, and the rest of the world the remaining 40 percent. But growth has not been uniform across all regions. The North American market saw significant growth, with a 20 percent year-on-year increase in the January to June period. In Europe, growth has accelerated after a two-year period of slow growth, including a decline in the last half of 2023. This resurgence has been driven by substantial marketing spend by aggregators, funded by contributions from restaurants on their platforms.
Growth in the rest of the world has been consistently strong, ranging from 20 percent to 25 percent over the past couple of years. This region, encompassing diverse 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 delivered meals, which will drive market growth and price increases, paving the way for profitable expansion.
Profits, measured by EBITDA, have risen across all platforms over the past two years. Deliveroo, the UK-based company, reported gross profits at 10.4 percent of GTV, a level which is now the industry norm. Adjusted EBITDA rose by 57 percent year-on-year in the first half of 2024 and stood at 1.7 percent of GTV, again reflecting the industry standard. Free cash flow, closely linked to EBITDA, was also positive in the period.
One notable figure however was the company’s £3.2 million net profit, a rarity in the industry.
But nevertheless, the trend towards profitability is upward across all reporting companies, despite occasional blips. Adjusted EBITDA data for all restaurant delivery businesses shows a promising trajectory, and although these figures are not exclusively focused on restaurant delivery, that channel remains the most important for all reported numbers, even as other verticals, such as grocery, gain traction.
Gross profit has been gently falling over the past two years, primarily due to growing sales and marketing costs needed to stimulate demand in somewhat sluggish market conditions, particularly in Europe. However, the four-year trend is upward, and demand is once again growing, driven partly by expansion into newer verticals.
Looking ahead, the figures suggest a route to long-term net profitability for 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. As we await H1 2024 figures from high-turnover delivery companies like Delivery Hero, Meituan, and Ele.me, the current data points to a market poised for sustained growth and profitability.
The restaurant delivery industry is entering a new phase of growth – perhaps reaching £470 million at GTV – and profitability, driven by expanding markets, increasing demand, and strategic investments. The global outlook is positive, and the industry is well-positioned to capitalize on emerging opportunities.
