The Rise of Meal delivery Services in Dubai

This is sponsored content. Barchart is not endorsing the websites or products set forth below.

The Rise of Meal delivery Services in Dubai

Post Covid-19 pandemic, online meal deliveries have become a popular choice for customers in many countries. UAE is not far behind; several food delivery apps and direct restaurant to customers deliveries have booked good business during this period. The UAE restaurant business recovered in the final two quarters of 2020 despite the significant fall in restaurant sales in Q1 and Q2. This mainly happened due to an acceleration in online sales.

Since then, the market has been expanding, and in 2021, new trends in food delivery were also seen. The expanding food delivery market also generated fierce competition among restaurants. 

A 2020 survey by a cloud kitchen service provider found that 57% of UAE food enthusiasts preferred a healthier diet. Blame it on the pandemic; several people in the Emirate experienced food-related stress due to the infection. After the pandemic, health enthusiasts constantly look for healthy alternatives like Dubai meal plans, healthy restaurants, nutritious food deliveries, etc. 

Growth of Meal Delivery Services and Reasons

Though meal delivery is not a new concept for Dubai, technologically advanced firms like Talabat have revolutionized the way we buy food. The technology is supported and driven by data, personalization, and convenience, evident by the widespread acceptance of these services in the past few years.

The multiple delivery networks compete with each other to grab a larger market share. To gain an edge over each other, these delivery services keep offering lucrative offers to the customers, which reflects the competition levels. Delivery apps also face fierce competition from cloud kitchens and restaurants’ personal delivery services. They are implementing unique improvements in their operations and food delivery processes, spawning various food delivery trends around the nation.

According to Statista, the share of the restaurant to the consumer still holds a larger market share than the platform to the consumer. And the trend is going to continue till 2026. The largest consumer base for online food delivery continues to be the younger age group (25-34 years old). The data also indicates it's not only the high-income group ordering food online. The middle-income group is not far behind and is almost equal in percentage.

Challenges for the Food Delivery Industry

For the longest time, demand in the food and beverage industry of the United Arab Emirates has outpaced the supply, causing many companies' revenues to stagnate or even decline. Although the market has proven to be very resilient, it does not always present new businesses with the chance to succeed. Price-sensitive consumers, high employee turnover, and high rents and wages are some of the significant issues this market is currently confronting. The price-sensitive consumers are more likely to grab the cheapest offers available online. Thanks to the internet, it has become a lot easier to compare prices before placing an order. However, food delivery businesses can afford to offer their employees competitive wages and are also adding new jobs to the food industry in the UAE.

Rise in healthy Eating in Dubai

In 2002, Covid-19 entered everyone's daily life. It was an eye-opener for many, and people realized the value of health and well-being. However, in Dubai, many saw health as the core of their lives even before the pandemic. Nevertheless, health became the center stage for the majority of people in a couple of years.

The healthy trends, in turn, sparked several other food patterns. For instance, many restaurants and cloud kitchens are experimenting with meals made entirely of plants and seasonal vegetables, offering a wide variety of menu items.

Subscription-based healthy meals cloud kitchen services have been operational in Dubai since early 2000. Kcal, Color My Plate, Right Bite, etc., are some of the prominent names in this industry. During the pandemic, new startups have joined the market with innovative menus and distribution networks, such as VMeals. Vegan, paleo, and keto diets were already there. Still, there is an increase in dietary trends like wellness diets, gluten-free, dairy-free, and low-carb menu alternatives. Gut-friendly eating has been another popular trend in the past couple of years— restaurants and cloud kitchens offer probiotics, fermented foods, prebiotics, cumin-rich curries, etc., to cater to this demand.

Future of meal delivery services in UAE

UAE and specifically Dubai is an ideal market for innovation in business because of government support and the socioeconomic environment for growth. The widespread and high internet penetration (99% population is active internet users), densely populated cities, and the technologically competent customer base, create an ideal environment for testing cutting-edge technologies.

Some of the innovations that are expected in coming years in the industry are:

• Delivery advancements: In Expo 2020, Talabat stall exhibited several innovations related to delivery. The use of drones and robots was the major highlight. Drones and robots are seen as the solution for faster delivery and affordability. Drones are expected to cover a wide range of places, are substantially less expensive, and are quicker. The company does not see drones as a gimmick; instead, the representatives genuinely believe it will give them a chance to grow and serve additional clients, as well as reach out to distant places for broader coverage. Experts comment, there is no doubt drones are innovative in many ways, but drone delivery is only one link in the value chain, not the whole solution.
• Cloud kitchens: In addition to the delivery experience, an increase in the cloud kitchens concept is also expected. Technological advancement in data and analytics can help algorithms easily locate cloud kitchens based on locations, cuisine preferences, etc. It will reduce the need for new entrepreneurs to find a place on a High Street and also impact the affordability and operating cost for new players.
• Managing Customer Expectations: Although customer expectations are constantly shifting, one thing that never changes is the customers’ desire for ease, variety, and affordability. For this reason, companies must adapt and evolve creatively if they want to win the hearts, minds, and stomachs of consumers. Regular consumer buying behavior and group market research tests can help to gain valuable information about customer sentiment. The studies can offer a unique perspective on how appealing the customer might perceive a service or product.

According to the Q2 2022 B2C Ecommerce Survey, the market in the United Arab Emirates is anticipated to increase by 25.52% annually to reach US$28.2 billion in 2022. The report included 4 food delivery companies for the study. This reflects the impact of meal delivery companies on the overall e-commerce business in the UAE. It is a big industry with the potential to grow much more prominent in the future, where technology will be the driving force.