India’s food delivery market surges, set for robust growth by 2030

Currently, over 70% of food services consumption is concentrated in the top 50 cities, primarily among upper-middle and high-income segments.

Online food delivery penetration has seen a substantial increase from 8% to 12% between 2019 and 2023, according to a joint report by Bain & Company and Swiggy released on Wednesday. This represents a 2.8 times growth in online food delivery compared to the overall food services sector, signalling a rapidly evolving market dynamic.

Despite this growth, India’s online food delivery market still lags behind more mature markets like the United States and China, which boast penetration rates twice that of India. The report also highlights a stark contrast in restaurant density, with India having only 1,000-2,000 restaurants per million people, a quarter of China’s density.

Currently, over 70% of food services consumption is concentrated in the top 50 cities, primarily among upper-middle and high-income segments. While these areas are expected to remain demand hotspots in the medium term, the report suggests that future growth will increasingly come from tier 2 cities and beyond.

The overall food services market in India, encompassing both dining out and ordering in, is valued at ₹5,50,000 crore ($67 billion). Projections indicate a robust annual growth rate of 10-12% over the next seven years, potentially reaching ₹900,000-1,000,000 crore ($110-122 billion) by 2030.

Online food delivery is poised for even more dramatic growth, with expectations of an 18% CAGR. This sector is projected to constitute 20% of the overall food services market by 2030, up from its current 12% share. In monetary terms, online food delivery is expected to reach ₹2,12,000 crore ($26 billion) over the next seven years.

The report also forecasts a significant expansion of the addressable customer base, growing from the current 320-340 million to 430-450 million by 2030, an addition of 110 million potential customers.

As India’s food delivery market continues its upward trajectory, it will be crucial for industry players to innovate and adapt to changing consumer demands while navigating the complexities of a diverse and rapidly evolving market.