[Press Release] Southeast Asia’s Food Delivery Spend Reached US$16.3B with Growth Driven Solely by Smaller Delivery Markets: Momentum Works

• Philippines, Malaysia and Vietnam led region’s food delivery growth in 2022 – a first in three years
• Grab accounts for 54% of the region’s food delivery GMV, followed by foodpanda at 19% and Gojek at 12%
• Consolidation and exits may be on the horizon as food delivery players rein in costs and push towards profitability

SINGAPORE, 17 January 2023 — Momentum Works today released its third annual “Food Delivery Platforms in Southeast Asia” report, offering in-depth insights into the region’s six core food delivery markets. 

The report revealed that Southeast Asia’s total food delivery spend grew a modest 5% to reach US$16.3B in 2022 after two years of Covid-driven deliveries boom. For the first time in three years, growth was driven primarily by the region’s smallest food delivery markets including the Philippines (+US$0.8B), Malaysia (+US$0.6B) and Vietnam (+US$0.3B). Larger markets such as Singapore (-US$0.4B), Thailand (-US$0.4B) and Indonesia (-US$0.1B), recorded a GMV decline as Covid became endemic and economies reopened. 

With mounting pressure to reach profitability, incumbent and new food delivery players have continued to cut back on their food delivery subsidies and compete based on service quality. As of end 2022, Grab is estimated to account for 54% or US$8.8B of the region’s food delivery GMV, a 16% increase from the year before. Foodpanda is estimated to contribute 19% or US$3.1B of the region’s GMV, a 9% decline from 2021. Gojek and Shopee are estimated to maintain their food delivery GMV at 2021 levels at US$2.0B and US$0.9B respectively. 

“The competitive landscape became a lot more muted in 2022 compared to 2021. New entrants such as Shopee and AirAsia have gone back to focus on their core sectors, while incumbent players adopt a much more conservative expansion strategy. With profitable growth being the biggest focus now, food delivery players are experimenting with a variety of strategies to improve delivery margins and strengthen consumer loyalty via advertising, subscription programmes, and more. We believe profitability is attainable with volume, density and operational efficiency,” said Jianggan Li, Chief Executive Officer and Founder of Momentum Works.

 

Key Industry Highlights

Momentum Works’ report also highlighted key regional industry trends in 2022:

1. Food delivery players exit unprofitable businesses and markets: Major players pivoted away from cost-intensive business models such as dark stores for groceries and dark kitchens for food delivery. This trend is expected to continue into 2023, with Shopee planning to refocus on its core business in e-commerce, and DeliveryHero rumoured to be divesting its operations in a few Southeast Asia countries.
2. Food delivery players make moves to consolidate fragmented F&B digitalisation: More players entered into strategic partnerships or acquisitions with point-of-sales and restaurant management solutions providers in 2022. These moves are expected to strengthen merchant retention and enable players to provide more and better differentiated services to merchants by harnessing online and offline sales data. This is a tested strategy by Chinese players such as Meituan.
3. Food delivery players leverage advertising and subscription programmes for revenue expansion: Major food delivery players have begun building advertising products to lock in more merchant investments. Many are also experimenting with subscription programmes as a tool to improve consumer retention and encourage larger basket size orders. Players that have a large consumer reach and merchant base will have an edge over others.
4. More defined online and offline strategies as merchants differentiate their channel offerings: Food delivery continues to form a substantial part of a merchant’s overall sales, even after dine-in resumption. As a result, merchants are creating more differentiated offerings and promotions for dine-in and food delivery to reduce cannibalisation and maximise sales for both channels. Similarly, delivery players are also expanding into the offline space through features such as dine-in coupons, restaurant reviews, and more.

 

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About Momentum Works

A Singapore-headquartered venture outfit, Momentum Works builds, scales and manages tech ventures across the emerging world.

Momentum Works also leverages its own knowledge, community and experience to inform, connect and enable the tech/new economy ecosystem. Key business areas include ventures, insights, academy and advisory.

 

For more information

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