Restaurant Closures In India Stymie Food Delivery Demand

Zomato app

Despite strong demand for food delivery in India due to dining restrictions wrought by COVID-19, transactions are below pre-pandemic levels because of a supply problem — many restaurants remain closed, delivery company Zomato concluded in a new report.

“The number of restaurants offering food delivery are at 70 percent of pre-COVID levels. Out of this, about 5 percent [of] 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,” Zomato’s researchers wrote.

Among a half-dozen major cities for which the report’s authors broke out data, Hyderabad had the highest rate of open restaurants — only 21 percent. The report’s authors state it was based on interviews with “thousands” of restaurateurs in India over recent days.

The report's authors concluded that food-delivery volume “may return” to pre-COVID levels in two to three months.

As hard as the food delivery industry has been hit, old-fashioned dining out has been all but eliminated, with traffic at 8 to 10 percent of pre-COVID-19 levels, the report states. “[The] 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.”

The report also sounds a note of optimism for regions that have succeeded in beating back COVID-19, stating: “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.”

As for Zomato itself, the pandemic appears to have driven an increase in overall demand.

Founder and CEO Deepinder Goyal said in a July blog post revenue for the fiscal year that ended March 31, 2020, increased to $394 million, up from $192 million in fiscal 2019. At the same time, the privately held company reported, the annual net loss grew to $293 million from $277 million.

In May, Zomato cited COVID-19 in laying off 13 percent of its workforce, or about 500 employees.

In the United States during the first months of the pandemic, the percentage of restaurant customers who interacted digitally increased to 20 percent from 6 percent, according to PYMNTS research.



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