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Covid-19 impact: More spending on food delivery business in the UAE

Dubai - Online transactions climbed more than 15 per cent in May over reported volumes in March, growing further by over 30 per cent in October as delivery became a popular and preferred choice following lockdown restrictions

Standalone restaurants in the UAE saw a significant increase in online food delivery spend as e-commerce payments surged in 2020 following the coronavirus outbreak, according to Network International.

Online transactions climbed more than 15 per cent in May over reported volumes in March, growing further by over 30 per cent in October as delivery became a popular and preferred choice following lockdown restrictions. Internet-based food ordering also rose as more outlets signed up to list their menus on multiple platforms to cater to growing market demand.

“Our payments insights are intended to help the F&B sector and related businesses understand spending patterns and chart new opportunities based on evolving customer preferences,” Nandan Mer, group CEO of Network International, said.

The leading enabler of digital commerce across the Middle East and Africa (MEA) said the Covid-19 pandemic accelerated demand for cashless transactions. Network is the UAE’s largest merchant acquirer and reported a 45 per cent year-on-year increase in overall e-commerce payment volumes in first half of 2020.

“Growth rates remained high through July at 61 per cent year-on-year basis with more customers opting for contactless transactions to avoid the possibility of virus transmission,” according to Network International.

Online sales within the UAE’s food and beverage market surged 255% year-over-year in 2020 to reach $412 million, according to a Dubai Chamber analysis that also predicted the value of online food and beverage sales in the country to reach $619 million by 2025 and record a compound annual growth (CAGR) of 8.5 per cent over the 2020-25 period.

According to Statista, global revenue in the online food delivery segment is projected to reach $151.5 billion in 2021. Recent reports suggest that in the Middle East and North Africa region, the UAE is the second-largest market for online food delivery with annual market size of $834 million.

“Industry reports also suggest that restaurant operators in the GCC region have begun using a combination of cloud kitchens and aggregator platforms to launch new virtual brands.”

Meanwhile, although dine-in point of sale (POS) transactions reduced in the first six months, footfall began to slowly pickup June onwards as restaurants opened under strict protocols and guidelines with regular inspections to ensure compliance.

Resident dine-in spending at standalone restaurants in the country naturally saw a sharp decline in the earlier part of the year, falling by as much as 70 per cent in second quarter of 2020 over the previous quarter, but rebounded to the single and low-double digits by the final quarter of 2020 as the UAE economy continued to ease restrictions.

“Broadening acceptance of digital and contactless payments including the option to pay ‘in-app’ even when dining-in, has further helped food outlets ensure and reassure customers of a safe experience,” according to Network International.

— muzaffarrizvi@khaleejtimes.com