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Foodtech in UAE – Searching for the recipe for success

Published in Nov, 2020

Executive Summary

Latest perspective of the foodtech segment in UAE – the market size, growth, challenges, customer expectations and more

The food services industry in UAE had been growing on the back of rising disposable income among the working population supplemented by a continuous increase in the region’s tourism. The estimated $35Bn food and beverages market of the country was growing roughly 6.5% year on year pre-COVID and the food services sector constituted roughly 45% of it by 2019. From the supply side, an increasing number of restaurants have been marking their presence online in the geography supplementing their dine-in revenue.

Post the pandemic, the overall food services sector suffered considerably and is expected to register a loss in earnings of almost 40% by year-end compared to the previous year. Restaurants continue to struggle in the new normal and some have permanently shut shop unable to bear the cost of operations associated with running a dine-in facility. The ones who continue to operate do so with stricter guidelines and newly adopted operating standards when it comes to hygiene and social distancing. While on one end the dine-ins lost around 80% of their sales post the implementation of lockdowns, online food delivery dealt with an ever-increasing number of orders as consumers grappled with the craving for food from their favorite restaurants.

The online food aggregators in the UAE were quick to respond to the pandemic. With a heightened focus of consumers on hygiene, the aggregators geared up their operations to address the sentiment via providing creative solutions – contactless delivery, real-time rider temperature mapping, restaurant rating basis hygiene standards they follow in food preparation, etc. Some pivoting to auxiliary opportunities such as the creation of dark stores and venturing into grocery supply along with lending their delivery fleet to cater to other hyperlocal businesses. 

COVID has led to a new normal creating lasting changes in the supply side partnerships as well as business operations. The changing consumer sentiments reflect a heightened need for hygiene and quality of packaging, however, sentiments like delivery speed and variety of food are expected to gain prominence in the long run.

The landscape for food services continue to remain bleak in the short run, however, with structural shifts in the supply chain, the solidified use case of online food delivery for the existing restaurants and an increasing need for a consumer-first mindset is bound to lead to lasting changes for the overall sector that in turn will benefit the end consumer.

We have formed the report basis RedSeer IP on the food-tech sector in the MEA region, consumer research conducted at key intervals to observe the changing sentiments, expert inputs, and the study of leading dark kitchen players in the market including – Talabat, Zomato, Deliveroo, Careem, Carriage, Spoonfed, etc.

This report includes the Pre-COVID context on the food services market in UAE and the effects of COVID on the channels – offline and online. Long term implications for the sector along with the use case for dark kitchens.

  1. What was the market landscape for the food services industry before COVID and its key growth drivers?
  2. How has COVID disrupted the food services industry and what it means for online food delivery in the long run?
  3. How is the consumer sentiment changing towards food consumption post-COVID and its implications for online food delivery?
  4. How will the food services market recover post-COVID and its impact on the online food delivery market?
  5. What are the new opportunities and challenges for various stakeholders of the food services industry?
  • See: Inside the Report

    1. The Market Scenario of Food Services in UAE.
    1.1. UAE’s digital economy and online food delivery userbase
    1.2. UAE Food Market Spend Funnel (Pre-COVID)
    1.3. Food Services Market Size, Penetration and Key Growth Drivers (Pre-COVID)
    1.4. Online Food Delivery Market Size, Penetration and Key Growth Drivers (Pre-COVID)
    1.5. Dark Kitchens Market Size, Penetration and Key Growth Drivers (Pre-COVID)
    1.6. Online food delivery business models in UAE

    2. Developments post COVID and rise of online.
    2.1. Overall Food Services Consumption - 2019 vs Pre-COVID 2020E vs Post-COVID 2020F
    2.2. Strategies adopted by brick-and-mortar restaurants to overcome COVID-related challenges
    2.3. COVID impact on various internet business - UAE
    2.4. Consumer Preference for Ordering Food Online
    2.5. Food Services and Online Food Delivery Market Size, Penetration and Recovery (Post-COVID)
    2.6. Dark Kitchens Market Size, Penetration, Key Growth Drivers and Recovery (Post-COVID)
    2.7. Strategies adopted by online food delivery and dark kitchen players to overcome COVID-related challenges
    2.8. YoY forecast for online food delivery market size and penetration in overall food services

    3. The way forward for online food delivery in UAE.
    3.1. Long term developments in the food services market post-COVID
    3.2. Change in parameters of restaurant selection for consumers and expected shift in the number of orders and average order value
    3.3. Takeaways for restaurants engaging in online food orders
    3.4. Forecast till 2023 – Food and Beverages market, Food services market, Online food delivery, and dark kitchens market

    4. Sustainability of food aggregators and new entrants
    4.1. Winning parameters and challenges of various business models in the online food delivery
    4.2. Expert inputs and Takeaways for restaurants engaging in online food orders
    4.3. Future potential for online food delivery aggregators and ancillary opportunities

    5. Food-tech players in UAE
    5.1. Talabat, Zomato, Deliveroo, Careem, Carriage, and Spoonfed
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