Click here to download this report in PDF.

The pandemic has had a massive effect on the restaurant industry. Over the last few days, we reached out to thousands of restaurants and customers across various cities in India to understand the current state and future outlook of the industry. In this report, we will present our findings for the two key components of the restaurant industry – delivery, and dining out.

India Food Delivery

HIGHLIGHT

• The food delivery industry has largely recovered, with the overall sector clocking around 75-80% of pre-COVID GMV.

KEY TAKEAWAYS

1. Some areas in some cities are clocking higher GMV than before (affluent neighbourhoods no longer fear contagion from food delivery, and are combining home entertainment with outside food). Predictably, residential areas are doing 50% better than commercial areas. Restaurants in and around commercial districts are expected to take the longest to recover.

2. Zomato has delivered 7 crore food orders since lockdown started on March 25th. We estimate that between other food aggregators and direct restaurant channels, Indians have ordered 20 crore times since the lockdown. There have been zero reported cases of COVID transmission due to food delivery.

3. Sporadic lockdowns in some cities disrupt business as usual for a few days. However, food delivery volumes bounce back as soon as these lockdowns are lifted.

4. The number of restaurants offering food delivery are at 70% of pre-COVID levels. Out of this, about 5% restaurants did not offer food delivery services pre-COVID. Most of these are dining out centric places which have shown agility to pivot to food delivery. 

5. With companies giving employees the option to work from home, there has been a mass exodus of people from metros to other cities across India – 1 in every 5 Zomato customers in metros (pre-COVID) have opened their app from a smaller town recently. Out of these relocated folks, one third have already started ordering food again from their new location.

6. Interestingly, ordering frequency of customers after their first order mid-COVID is the same as pre-COVID, which shows that the first order mid-COVID is key for customers to cross the hump of safety perception.

7. Recovery trends are strong and we estimate the industry to hit pre-COVID levels of business in the next 2-3 months.

India Dining Out

HIGHLIGHT

• Dining out industry in India is yet to bounce back and operating at 8-10% of pre-COVID levels. Slump in the industry is largely driven by markets being in lockdown, consumers not stepping out due to fear of transmission and restaurants not opening up, even if the city is not in lockdown. 

KEY TAKEAWAYS

1. Even in cities where restrictions have been lifted, only 17% dining out restaurants are open for business at the moment which are also running at low capacity.

2. Out of the 83% restaurants that are not open for business, 10% restaurants have already shut down permanently and we anticipate an additional 30% restaurants to not reopen at all. Remaining 43% are closed right now but likely to open, as the situation becomes better. 

3. Most of the customers plan to decrease spending on dining out in the near future and some of this spend will shift to food delivery. 60% restaurateurs said they estimate to retain less than half of their original business volumes for a few months even post-COVID.

4. Safety and hygiene have now become a permanent addition to the customer’s decision making model. In markets with low COVID incidence (e.g. New Zealand), safety and hygiene still figure as one of the top factors but usual factors like price and location have already started commanding a higher significance in a consumer’s decision making process compared to two months ago.

5. Strong recovery in international markets paints an optimistic picture – Zomato’s dining out transactions in markets like New Zealand, UAE and Portugal are already back to pre-COVID levels. However, recovery in India will be slow and would largely be driven by industry’s ability to build back consumer confidence.

Despite the tough macro environment, it is heartening to see restaurants reimagining their operations rapidly to accommodate new social engagement constructs. When we step into restaurants now, we are bound to notice changes (staff wearing masks, tables arranged at a distance, digital menus, ordering & payment), that were not part of the restaurant dining experience six months ago. 

We thank all our restaurant partners and customers for their candid participation in this study. We hope this gives restaurant owners some useful data and points of view to plan for the future of their businesses.