Food & Drink

UAE food delivery sector has strong appetite for growth

February 22, 2023

Papa Johns plans to treble its restaurant numbers in the region in seven years

Industry could be worth $2.79 billion by 2026
Talabat dominates services in region
Order processor Deliverect reports 384 percent growth in UAE

The UAE’s food delivery market is yet to reach saturation point, according to industry experts, and there is still plenty of room at the table for others to join the party.

Statista, the Hamburg research platform, reported that the sector in the UAE is forecast to see annual growth of 6.33 percent overall through to 2026, when it is estimated it will be worth $2.79 billion.

The report added that, among the myriad players in the UAE’s food delivery sector, Talabat took the largest share of the market in a sample taken in May last year (78 percent).

It is followed by Deliveroo (12 percent), Zomato (owned by Delivery Hero and operated by its subsidiary Talabat Middle East) reached 8 percent and Careem Now 4 percent.

Speaking during a panel discussion at Gulfood, the largest annual global food and beverage sourcing event in the world, Neha Sood, UAE Market lead at Zomato (AE), said: “The UAE is a very unique market. I feel like there are a lot of players but there is space for them.”

Founded in India in 2008, Zomato sold its UAE food delivery business to Germany’s Delivery Hero in 2019 for a fee in the region of $172 million.

Sood said that, following the complete migration of the business arm in November last year, Zomato was “going back to its roots”.

“We started as a search and discovery platform in the region and that still remains a problem when it comes to dining out. When people are figuring out what places to go out to, that’s still a problem area,” she said.

A total of 127 merger and acquisition deals – pending and completed – were announced in the global food service sector in the 12 months through to June 2022, resulting in a total deal value of more than $25.3 billion.

Among them was the acquisition by Careem of subscription-based food delivery platform Munch:On in the UAE.

Tapan Vaidya, CEO of PJP Investments Group, said he believed further consolidation would remain limited to aggregators.

“At a regional level, I don’t see operators consolidating to improve their delivery part of the business,” he said. “I don’t think that is going to happen and certainly operatives have not been able to get together and form a logistical team, having failed a couple of times.”

PJP Investments Group operates 105 Papa Johns restaurants in the UAE, Saudi Arabia and Jordan. Vaidya revealed plans to treble that number to 320 “over the next seven years”.

Naji Haddad, general manager of Deliverect Mena, a software solution to help restaurants with online orders, told the panel discussion they have processed 260 billion orders since launch four-and-a-half years ago and recently celebrated the milestone of processing 1,000 orders in a minute.

He revealed that growth in the UAE in 2022 was around 384 percent, while that number hit 1,005 percent in Saudi Arabia.

“What we’re seeing is a lot of tech companies investing in their merger and acquisition departments,” he said. “There’s a lot of new entrants. There’s a lot of new delivery channels and business models.”