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Food delivery involves the conveyance of food by a restaurant, store, or food delivery company to a customer. The process begins with customers placing orders, typically via digital channels; the delivering party receives and processes the request, and arranges for the transportation of the requested food to the customer.

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The major players in this space are either digital food delivery platforms or restaurants offering delivery services. Taken together, they could be worth $465 million in 2020; a substantial amount, considering that this segment barely existed a decade ago. Revenues are believed to have amounted to $332.6 million in 2019. Growth has been driven by an expansion in Nigeria’s internet user base; intense marketing by emerging e-commerce players; and a large, mostly youthful population that is open to new ways of using technology. Nigerian households spend about $12 billion annually on food prepared outside of their homes. This constitutes 11% of their total yearly consumption expenditure. A large proportion of this comes from small scale restaurants; Quick Service Restaurant (QSR) chains make up a small but growing portion of the remainder. As of 2016, QSRs and other fast food outlets accounted for about $800 million of the total food industry value, according to the Association of Fast Foods and Confectioneries of Nigeria (AFFCON).

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Over the past five years, these segments have begun to deliver food to their customers outside of their premises. They either do this directly through delivery vehicles or via independent delivery platforms on which they have registered. The former approach may involve setting up a social media page (Instagram is a preferred medium) or a website where the images of the dishes on the restaurant’s menu are displayed. The restaurant’s contact details are provided as well, allowing prospective customers to order a meal. In the latter case, restaurants sign up with food delivery platforms such as Jumia Food, AreaChops or GoFood, and take orders from customers via the platform, which handles the logistics of delivery. This new segment combines benefits from meals made in situ and outsourced food preparation. It’s an offer that a large cross-section of Nigeria’s population was bound to find attractive. Forecasts suggest that growth in the food delivery segment will continue in the medium term, as the driving factors mentioned are expected to trend upwards over the next four years. A projected CAGR of 11.2% could grow the market volume to $712 million by 2024, more than quadrupling its value from 2017 (about $172 million). Featured Image Source: WSJ

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This article was first published on 13th August 2020

ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.