India’s online food delivery may return to pre-COVID levels in 2-3 months, says Zomato

Photo: Zomato

Online food ordering platform Zomato on Wednesday said that India’s food delivery industry is nearing pre-covid levels with the sector now registering 75-80% of pre-covid GMV or gross merchandise value. However, for restaurants, especially those that rely heavily on dine-in, the news isn’t encouraging—Zomato expects several eateries to permanently close down in the near future highlighting the financial stress the sector has endured due to the pandemic.

Zomato expects the food delivery industry to hit pre-covid levels of business in the next 2-3 months, the food ordering platform said in its “State of the Restaurant Industry in India” update—highlighting the ordering behavior of consumers and the state of restaurants in general. Of the restaurants surveyed, Zomato expects 30% to close down permanently; already 10% of those surveyed have shut shop.

India’s eating out market essentially collapsed briefly after the imposition of the nation-wide lockdown.

Delivery services, however, continued to run depending on restaurants that were able to operate during the strict lockdown. But a bulk of the industry that employs millions has lost out on months of business due to restrictions on opening up and the subsequent need to maintain social-distancing in public spaces.

For restaurants, that have taken to delivery strongly and cloud kitchens, things have shown improvement, especially as the country has partially restored economic activity and general consumer anxiety around ordering in has come down.

Restaurants are also back to being listed on online food ordering platforms.

In fact, Zomato noted that the number of restaurants offering food delivery on its platform are at 70% of pre-covid levels.

“Out of this, about 5% restaurants did not offer food delivery services pre-COVID. Most of these are dining out centric places which have shown agility to pivot to food delivery,” it said.

Delivery services, however, continued to run depending on restaurants that were able to operate during the strict lockdown. But a bulk of the industry that employs millions has lost out on months of business due to restrictions on opening up and the subsequent need to maintain social-distancing in public spaces.

For restaurants, that have taken to delivery strongly and cloud kitchens, things have shown improvement, especially as the country has partially restored economic activity and general consumer anxiety around ordering in has come down.

Restaurants are also back to being listed on online food ordering platforms.

In fact, Zomato noted that the number of restaurants offering food delivery on its platform are at 70% of pre-covid levels.

“Out of this, about 5% restaurants did not offer food delivery services pre-COVID. Most of these are dining out centric places which have shown agility to pivot to food delivery,” it said.

India continues to impose restrictions in serving liquor in premises, effectively prohibiting bars and several restaurants from earning more business.

“The worst hit of course if the dining industry. Dining out industry in India is yet to bounce back and operating at 8-10% of pre-covid levels. Slump in the industry is largely driven by markets being in lockdown, consumers not stepping out due to fear of transmission and restaurants not opening up, even if the city is not in lockdown,” Zomato said in its update.

While dine-in orders have shown only marginal improvement, as per data from Zomato, the restaurant industry that essentially thrives on social occasions has a long road to recovery.

Zomato noted that 60% restaurateurs said they estimate to retain less than half of their original business volumes for a few months even post-covid.

For several large chains business including dine-in (wherever permissible), takeaways and online deliveries are still about 25-30% of their pre-covid levels, signaling that the companies have a long stretch to cover.

Further opening up of the market and permitting liquor in restaurants might help them recover lost business.

The pandemic is likely to force several restaurants to permanently shut down. Even in cities where restrictions have been lifted, only 17% dining out restaurants are open for business at the moment which are also running at low capacity, Zomato said.

Out of the 83% restaurants that are not open for business, 10% restaurants have already shut down permanently; Zomato anticipates an additional 30% restaurants to not reopen at all. Remaining 43% are closed right now but likely to open, as the situation becomes better, it said in its report.

For several large chains business including dine-in (wherever permissible), takeaways and online deliveries are still about 25-30% of their pre-covid levels, signaling that the companies have a long stretch to cover.

Further opening up of the market and permitting liquor in restaurants might help them recover lost business.

The pandemic is likely to force several restaurants to permanently shut down. Even in cities where restrictions have been lifted, only 17% dining out restaurants are open for business at the moment which are also running at low capacity, Zomato said.

Out of the 83% restaurants that are not open for business, 10% restaurants have already shut down permanently; Zomato anticipates an additional 30% restaurants to not reopen at all. Remaining 43% are closed right now but likely to open, as the situation becomes better, it said in its report.

The article was first published on livemint.com

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.