Thank you to everyone who joined the “On a Platter: Food delivery landscape in Southeast Asia” briefing right before the Lunar New Year. 

With a lot of insights to cover and close to 400 participants, there were many questions which we did not have time to discuss. 

We promised to share our thoughts on these questions on TheLowDown – here we go. We are publishing these in two parts – here is part 2 (you can read part 1 here). Any additional thoughts, discussions and comments are welcome: 


Cloud kitchen

15. It’s interesting to know that cloud kitchens also offer dine-in. Can you elaborate more on that?

Pure online models have proven to have a lot of wastage (with no physical brand presence and subsequently no guarantee of traffic) – many with pure online cloud kitchen models failed as they can’t make it for the minimum order volume. 

As we have mentioned in our Jan 2021 report, many brands are using cloud kitchens as a short-term resort to build brand awareness online or to experiment with new brands without leasing expensive real estate or paying for costly renovation. 

Eventually, cloud kitchen expanding into dine-in is a natural development, to harness the online and offline brand name and traffic. 



16. Do you see food delivery players give up grocery delivery altogether?

We don’t see them giving up grocery, but what happened last year was that many players gave up owning their own inventories. 

We have had a lot of discussions with people who have invested in or operated dark stores in China. It’s a difficult business model to run. 

Some data points we got from China are that significant order volume and density are needed for dark stores to be profitable in certain cities – e.g. 3500-4000 orders per day per store serving a 1.5km radius. Only at that volume they can optimise inventories and delivery operations significantly to breakeven operationally. 

In Southeast Asia we don’t think anyone has achieved that yet.

At the end of the day, grocery is a large market, we don’t think big platforms would give up, but they will scale down owning inventories. The ‘grey store’ and 3P models mentioned in our report will be the focus of the major players. 



17. Can you share more about the grey store model and the operating margins for this model?

It is online-offline integration, as opposed to pure online (dark store) or pure offline (supermarket) models. Consumers can browse and purchase in-store, or order delivery from the same store. 

In addition to Grab’s integration with Jaya Grocer, the platform also works on such models with partners in other countries. 

We do not think we can have a clear picture over the long term operating margin of this model yet – many factors are at play, including basket size/order frequency, and fulfillment costs (which itself is a factor of order density, infrastructure, driver/rider incentives, and even in-store picking efficiency). 

Alibaba’s Hema Fresh has recently announced profitability, but we believe there are a lot of nuances within and it is hard to benchmark this with Southeast Asia without studying all these details. 


Restaurant tech

18. What is the kitchen display system, please? Do you mind elaborating? 

You will often see this in the kitchens of major QSRs – big panels in the kitchen displaying orders placed and food preparation progress (as below). 

Other restaurants have not squeezed operational efficiency as much as QSRs have. With the right (and cost effective) tools they might give it a try.  

19. Can you share more about the revenue/margins of Restaurant tech? From what I understand the majority of the revenue is from the POS systems that the major players already have. Many restaurant tech companies develop other products (like queue management) in order to attract merchants to sign on for their POS

We do not think the SaaS revenue model for restaurant tech in Southeast Asia is ever going to be viable. If you have built a company doing so, you should pivot (to marketing or payment processing, for example); if you have invested in a company that is doing so, you should convince the founder to pivot. 

There is one caveat though – that is if you have a large strategic partner. Grab, Foodpanda, Gojek and Lineman Wongnai have all acquired restaurant tech players – they can’t be building the whole ecosystem entirely on their own. So there are pockets where entrepreneurs can still build, in hopes to sell to large strategics. 



20. What’s the sentiment of restaurant owners towards restaurant tech, delivery apps and all the digital fragmentation?

Many of the restaurant operators are confused about the different systems and frustrated about the high communication / training cost – they have to train each waiter, many of them part-time. Also, reconciliation of sales across different terminals is extremely difficult. Especially when now they have to also deal with the returning of the offline consumer traffic (operational complexities). 


21. In terms of smart solution providers for Restaurant including POS, ordering system and CRM etc, could you share with us who are great/key players in each country if possible.

Let us come back on that point – probably through a new report. Many key players in each country are not necessarily great players. There are a few though where we think the founders have a very shrewd mind about the business model. 

But if you want our opinion on any specific player in the meantime, do reach out to us and we are happy to share our thoughts. 


22. Do you see a single player aggregating the POS systems like Meituan in China?

We think it is possible but this is probably hard to achieve in Southeast Asia than in china, for a number of reasons: 

  1. The percentage of restaurants revenue coming from delivery post-covid is smaller in Southeast Asia than in China, resulting in less dependency but also less operational gain through using the platform’s POS; 
  2. POS deployment for larger joints and chain stores in many parts of Southeast Asia actually happened earlier in China, replacing all these legacy systems is a more difficult undertaking compared to deploying to establishments which never had a POS before; 
  3. Payment in China is more consolidated than Southeast Asia, resulting in easier integration; 

Therefore, to reach Meituan’s level of success in POS/restaurant system deployment, a leading player in Southeast Asia needs to be extra aggressive in product, sales push, as well as expanding value proposition to the merchants. 


Profitability and ancillary revenue

23. Since most of the players in SEA already implemented advertising, subscription, and even POS. What are the other potential channels for revenue growth in order to compete?

  1. Financial services, which include payment, lending and other SME/consumer banking services; 
  2. Supply chain for restaurants – although this is operationally super heavy, very local and very hard to execute; 
  3. Additional consumer services at restaurants on a revenue-sharing model: such as power bank rental in China. Though they can be execution heavy and contribution margin thin. 

That said, the more important question here is  – how can platforms execute each revenue stream well, and realise greater synergies within the ecosystem.


24. How profitable do you think food delivery can be?  As % of GMV?

It differs by country (or more precisely, city) and is impacted by many factors, such as local infrastructure, demand and supply density as well as the delivery costs. 

As a benchmark, Meituan, arguably the most efficient platform in the world, achieved a food delivery operating margin of ~6%. This is after 8 years of ruthless optimisation since 2013. 

As mentioned in the report, we do think this is possible for Southeast Asia – but again this will probably require a lot of hard work on the platforms to constantly optimise. 

Another question is how big the market really is, eventually. This will determine how much HQ and other overhead costs can be allocated, which is important for the ultimate bottom line of the business. 


25. So what is the key difference between Meituan and the SEA food delivery players besides efficiency?

Macro backdrop. Ultimately, China is a very unique market, where industrialisation, urbanisation and mass digitalisation happened at the same time. This affects the volume, density of supply and demand (restaurant availability, food delivery demand) as well as operational efficiency (thus cost) of food delivery platforms. 

We could argue that if not Meituan, some other player would have emerged to take on the same opportunity, and possibly reaching the similar level of volume, density and operational efficiency. 

Whoever wins the market will come down to leadership, people, organisation and product, in that order. You can get a deeper dive into this topic in Guoli Chen and Jianggan Li’s book Seeing the Unseen: Behind Chinese Tech Giants’ Global Venturing and Momentum Academy’s report Tech leaders with Chinese characteristics

Monentum Academy is also launching a case study on Meituan which discusses many of the issues mentioned above, and you can download a copy here


About the event

26. Will the recording of this webinar be shared with attendees?

Yes. You can also view the recording of the event here



You can get the full Food Delivery Platforms in Southeast Asia 2023 report here.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].