In Africa, as in other parts of the world, food delivery is a fast-growing sector. Over the past five years, the market has experienced positive growth, benefiting from increasing food consumption in cities. However, this promising market is still full of ups and downs for both established companies and newcomers.
A Consumer-Driven Trend
In Africa, the food delivery segment is in its burgeoning years. Several factors have contributed to this, including opportunities for the food retail business, driven by rapid urbanisation, a growing middle class, and a transformation in eating habits.
With rising average incomes and changing lifestyles, urban consumers are increasingly seeking quick and easy dining options instead of preparing meals at home or waiting long hours in restaurants or other food outlets.
Thus, food delivery has become a logical response, boosted by online ordering platforms in many African cities. The pandemic accelerated the adoption of digital technologies, encouraging many restaurant operators to create menu items that could be ordered online and implement contactless payment systems and mobile apps to enhance customer convenience and safety.
Although the pandemic is behind us, this dynamic has not ended and is expected to continue generating income as consumers are increasingly attracted to easier and faster ways of buying. This trend is supported by increasing internet connectivity, the use of smartphones, growing consumer trust in online transactions, and the emergence of secure electronic payment solutions.
A Billion-Dollar Business
Since 2017, there has been significant growth in Africa’s food delivery market. According to Statista, revenue in Kenya climbed from $2 million (€1.84 million) to $36 million (€33.12 million) in 2020, while the South African market recorded $732 million (€673.44 million) in 2020, the highest revenue in Africa.
According to Statista data, online food delivery (OFD) revenue in Africa was a €6.89 billion business in 2023 and is expected to reach €8.72 billion in 2024. Moreover, it is forecast to grow to €15.44 billion by 2028, at an annual growth rate (CAGR) of 15.35%.
With the increasing urban population and rising demand for convenient and quick meal options, Nigeria is expected to lead the region in online food delivery revenue, surpassing South Africa.
This positive outlook has attracted numerous companies, leading to increased investments to expand their presence or enter the business over the past five years.
The landscape of primary food delivery companies in Africa includes Uber Eats, Estonian food delivery startup Bolt Food, and Spanish startup Glovo, which deliver quality service for restaurants and diners across African countries.
These big three enjoy the largest share of the market, followed by other domestic food companies such as ChowDeck in Nigeria, Mano in Angola, Gooo Delivery, and Elmenus in Egypt. While Uber Eats is active in Kenya and South Africa with over 400 restaurants on its app offering both domestic and international favourites, Bolt and Uber Eats have a presence in more markets.
Bolt Food established a new African headquarters in Nairobi in 2022 and now serves five African nations (Kenya, Uganda, Tanzania, Ghana, and Tunisia). Glovo offers food delivery to clients in major cities across Kenya, Nigeria, Tunisia, Morocco, Côte d’Ivoire, Algeria, and Senegal.
Big Challenges
While the outlook for the African food delivery market is positive, it also presents several challenges for many operators. The coronavirus pandemic saw the emergence of new players and the strengthening of existing ones, intensifying competition.
In this market, however, where most companies target the same middle-class consumer profiles, profits are hard-won. The race for customers requires major investment in marketing, as well as a reduction in operating costs, all while remaining affordable for consumers in terms of price. In this context, many operators have been forced to rethink their strategies, either trying to win market share or, in extreme cases, exiting the market to limit losses.
This is particularly true of Jumia, a good illustration of the challenges companies face in this highly competitive segment. The company, which operated in the meal delivery sector in seven African countries (Kenya, Tunisia, Uganda, Morocco, Nigeria, Algeria, and Côte d'Ivoire), announced its exit from the business in December 2023.
Since launching on the market in 2012, Jumia Food has never been profitable, according to the company, citing downward pressure on commissions and a trend toward higher marketing costs. Similarly, other major players in the African food delivery market have ceased operations in various countries over the past two years.
Bolt Food announced its exit from Nigeria and South Africa in December 2023 to focus its resources and maximise its overall efficiency in other regions. In addition, Glovo decided to cease operations in Ghana in May 2024. The company, which invested $3.7 million (€3.40 million) in 2022 to expand its operations across all Ghanaian regions, stated that this strategy had not proven profitable due to high inflation and increased taxation.
This reconfiguration of the market reminds all players that the food delivery segment in Africa is amongst the most challenging in the world. In a turbulent business environment, the players who come out on top will be those who are flexible in both their approach and strategy for adaptation.
Still, it's also a sector that holds great growth potential for those who are ready for the adventure.
