The food aggregators and quick-service restaurants, or fast-food restaurants, are upping their competition for direct consumer reach, as the food services market in the Middle East and North Africa (MENA) region is projected to see massive growth, new research shows.
Based on the current trend, quick-service restaurants are predicted to see three-fold growth in their customer reach by 2025, according to a market study by global consulting firm RedSeer Consulting.
Restaurant chains and standalone eateries are also expected to join the race by developing their own apps to reach consumers directly, the report said.
Restaurant and food court dining – which saw a major drop last year due to the pandemic – is projected to see a bounce back by next year, and the market is expected to reach a whopping $70 billion, while the online food services sector is predicted to reach $15 billion in 2025 in the MENA region, RedSeer said.
“Food aggregators will keep dominating the market because of high quality delivery experience as well as superior delivery infrastructure, though food service players, especially chained quick-service restaurants which have capital to build online capability, will increase focus on their own apps in the coming years,” the market study said.
“This is expected to lead to three-fold growth in quick-service restaurants’ customer reach over the next four years,” the study said.
Sendeep Ganediwalla, Dubai-based managing partner of RedSeer Consulting, said that given the food services sector is fragmented, food aggregators have helped consolidate the sector.
“Food aggregators have really helped in driving the online food services market through a wide variety of food options, aggressive promotions and quick delivery. However, we do expect to see more restaurants to start developing their own apps to reach the consumers directly,” Ganediwalla told Arabian Business.
Sendeep Ganediwalla, Dubai-based managing partner of RedSeer Consulting
In the app-based delivery segment, quick-service restaurants are currently dominating with a higher direct market reach, the study said.
McDonald’s, Pizza Hut, KFC, Nando’s, Burger King, Subway and Papa John’s are among the leading quick-service restaurants, while Talabat, Deliveroo, Zomato, Uber Eats and Careem are the leading food aggregators present in the region.
Market experts said striking the right balance will be the best option for both sets of players to grow.
“Quick-service restaurants are usually met with the trade-off between focusing on their own app versus a marketplace app. Each has its own pros and cons,” a senior industry executive said.
The RedSeer study said having one’s own app creates better control of the brand, greater engagement with the customer, but it is also a high cost and effort activity in terms of building a user base and capabilities.
“On the other hand, marketplaces provide the capabilities and presence that the quick-service restaurant may need, but this is at the cost of high competition as well as costs and commissions.
McDonald’s, Pizza Hut, KFC, Nando’s, Burger King, Subway and Papa John’s are among the leading quick-service restaurants
“[A restaurant having their own] app give strength to a long-term strategy, while marketplace apps help in the short to medium term. Thus, restaurants need to increasingly balance between focusing on their own apps and listing on marketplaces,” the report said.
The RedSeer study also revealed that the food service sector has lagged other sectors in direct app penetration by huge margins.
The combined market penetration of quick-service restaurants and food services stood at about 22 percent, while the app penetration of the fashion industry topped the table with 71 percent, followed by grocery at 61 percent and the beauty and personal care segment at 51 percent in the UAE market, the market study said.
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