Southeast Asia’s total food delivery spend on platforms grew a modest 5.0% YoY to reach US$17.1B in 2023, mirroring the growth rate observed in 2022;Grab accounts for 55.0% of the region’s food delivery GMV, followed by Foodpanda at 15.8% and Gojek at 10.5%. ShopeeFood & LINEMAN showed notable growth; Vietnam led region’s food delivery growth in 2023 – growing by almost 30.0% despite cost control from almost all food delivery players; Total F&B spending in Southeast Asia estimated to be US$125.2B in 2023 – surpassing pre-pandemic levels, however premium F&B brands (notably in Singapore) face challenges;Further consolidation may be on the horizon as key players push towards sustainable profitability and DeliveryHero looks to divest FoodpandaSINGAPORE, 30 January 2024 — Momentum Works released its fourth annual “Food Delivery Platforms in Southeast Asia” report today, offering in-depth insights into the region’s six core food delivery markets. Southeast Asia’s total food delivery spend on platforms grew a modest 5.0% YoY to reach US$17.1B in 2023, mirroring the growth rate observed in 2022. The growth was driven primarily by the region’s smallest food delivery market, Vietnam (+US$0.3B or 27.0% YoY), followed by Malaysia (+US$0.2B or 9.0% YOY). Thailand and Indonesia registered low single digit growth, while Singapore’s topline remained flat. With continuous pressure to achieve sustainable profitability, most incumbent players have continued to rein in food delivery subsidies and adopt differentiated strategies to compete. As of end 2023, Grab is estimated to account for 55.0% or US$9.4B of the region’s food delivery GMV, a 6.8% increase from the year before. Foodpanda and Gojek are estimated to contribute 15.8% (US$2.7B) and 10.5% (US$1.8B) of the region’s GMV, a 12.9% and 10.0% YoY decline respectively. Shopee and Lineman showed notable growth, and are estimated to contribute 8.8% (US$1.5B) and 8.1% (US$1.4B), respectively, to the region’s GMV. “With robust F&B consumption, low food delivery penetration and ongoing consolidation, there is a lot of room for growth for food delivery platforms in the region. While focusing on their core capabilities, leading players also need to keep an eye on potential market changes and emerging challengers.” said Jianggan Li, Chief Executive Officer and Founder of Momentum Works.Key Industry HighlightsMomentum Works’s report also highlighted key regional industry trends in 2023:Premium F&B brands face challenges despite regional spending on F&B recovering: F&B spending in Southeast Asia finally recovered to surpass pre-pandemic levels (US$125.2B in 2023 versus US$115.7B in 2019). However, many premium brands (notably in Singapore) found the year tougher than 2022, with many resorting to cost cutting measures amidst macro uncertainties and inflation, which may have heightened price sensitivity among the middle-class diners.Entry of Chinese F&B brands en masse intensifies competition: 2023 saw an acceleration of Chinese F&B brands’ entry and expansion into Southeast Asia. This trend is exemplified by Luckin Coffee’s 30 stores in Singapore and Mixue’s close to 4000 outlets across Southeast Asia, however brands in multiple categories and sizes have also established presence in the region. They have brought in their knowhow in store operations, marketing, user operations and franchise management. Expect more in 2024. Major players have achieved some sort of profitability: Most major platforms have either achieved or are on track to attain adjusted EBITDA breakeven, with some targeting to achieve positive free cash flow in 2024. But, as Meituan and Uber experiences have shown, profitability might not be a constant state – platforms need to constantly balance growth with sustained profitability.Food delivery players continue to diverge in strategy, leveraging advertising for revenue expansion: Major food delivery players have continued leveraging advertising products to lock in more merchant investments. Platforms are expanding their advertising product portfolios to cater to the distinct needs of various brands, including large F&B chains, small F&B merchants, and FMCG brands.Room for growth in user base and operational optimisation in the region: Southeast Asia’s leading player Grab only has 5% of the region’s population of 600 million as monthly transacting customers. Amid a flat sector topline, untapped populations in major cities, expansion into smaller cities, and catering to tourists present further growth opportunities for food delivery platforms. Platforms can and should also continuously optimise operations to reduce costs and grow their bottom line. To better understand the evolving landscape and market dynamics of food delivery platforms in the region, check out our Food Delivery Platforms in Southeast Asia 2024 report. The report is complimentary for a limited period of time.Related —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].
