It’s on its way

Food delivery apps are gaining popularity in Saudi Arabia. As of 2019, food delivery apps are used by over 6 million people across the Kingdom, which is 21.5% up YoY. This expanding user base has directly translated into higher revenue. With an annual market size of USD1.17 billion, Saudi Arabia currently has the largest food delivery market in the MENA region, with the UAE (USD834 million) and Turkey (USD666 million) in the next slots.

If the current trend, especially since 2017 is anything to go by, there is every sign that the online food delivery industry will continue to grow, registering an annual revenue of USD2 billion by 2023. To put things in perspective, back in 2013 certain analysts had—in optimistic tones—predicted that the online food ordering sector would balloon up to around USD220 million in size by 2020, whereas it will reach USD1.4 billion based on currently available data.

In addition to lifestyle considerations and Saudi Arabia’s climate, the sector’s stellar performance has been driven by several factors such as the recent increase in the internet penetration rate, the Kingdom’s population makeup, and the relatively high spending power. The rise in smartphone ownership and the ubiquity of 4G connectivity in the early 2010s had set the stage for the dawn of uberization across several industries. Saudi Arabia’s young and urbanized population was quick to embrace the smartphone revolution and the myriad of other digital byproducts that came along with it. According to Newzoo’s Global Mobile Market Report, smartphone penetration was at 46% in 2018, which was higher than the world average. Meanwhile, over 80% of the population have access to the internet in one form or another.

Many entrepreneurs in the region rose to the occasion by launching delivery apps that offer uberized couriers, connect restaurants, fast-food chains, cafes, and catering services to the end customers. An increasing number of Saudi restaurants are now connected to one or more delivery platforms.

More players are making an appearance thanks to the present enabling conditions; however, competition is getting fiercer. Although the market size for internet-based food ordering services is large, making money in the market for individual players is not as easy as it used to be. Market players have to fight hard to defend their place in the market. Jazzly, owned by Al-Jazirah Ecommerce and Distribution Company, is a rising platform that allows the citizens of Riyadh to order not only food but also dates, confectionery, and fruits. Talabat, owned by Delivery Hero, is one of the largest platforms for ordering food online, though Uber Eats also has operations in Riyadh, Jeddah, and Dammam.

Apps from elsewhere in the region, too, are expanding into the Kingdom. The Dubai-based transportation company, Careem, launched its food-delivery service in Riyadh a few months after the service first went online in Jeddah; however, the impact of widespread food delivery on the health and lifestyle of the population should not be neglected. Eating out is already a major trend in Saudi Arabia, and the ready availability of delivery apps can make overeating easier than ever, leading to obesity and heart problems.

There are also some apps in the market that try to address this very concern by delivering healthy but popular meals such as home-cooked traditional Arabic dishes, whose nutritional value is superior to fast food, while having lower fat, sugar, and salt contents. The award-winning Mathaqi app is one such innovative attempt. Since its launch in 2017, the app has partnered with talented home cooks to deliver genuine home recipes to its customers—the sort that “you will never get in your neighborhood restaurants.”