In 2016, Singaporean ride-hailing company Grab has followed the footsteps of Uber and opened its own food-delivery business, GrabFood. Now, its food-delivery service may just be the thing that pushes it to profitability, growing a whopping 900% year-on-year in June 2019.
The service was available in only two Indonesian cities at the beginning of 2018, but has now expanded to more than 200 cities mostly across Indonesia, Thailand, Malaysia, Singapore, Philippines, and Vietnam.
"We've seen tremendous growth in our food business," said Kell Jay Lim, co-chief of staff to the CEO and regional head of GrabFood. "We did have pockets of food delivery businesses throughout Southeast Asia already, but not across the region."
This kind of growth brings attention to the disruptive technology that food delivery apps bring to the table, changing the way the world thinks about the food business and conventional restaurants. 700,000 restaurants have been threatened by the new model of home delivery.
In fact, Virtual Restaurant Consulting (VRC) has created a Virtual Restaurant Builder, an online program that helps restaurants build their own "virtual restaurant," which functions only on deliveries and can operate out of a commercial space or private kitchen. Such spaces are called cloud or ghost kitchens.
This is just one example of the way in which technology capitalizes upon existing peer and consumer networks to minimize physical overheard costs- including physical kitchen space etc.- and maximize profits.
In fact, there is still a lot of room for the food delivery business to grow in South Asia, where the concept is quite a novelty at this point and there are still multiple markets that can be tapped into.
What's more is that in addition to transportation and food services, Grab also provides digital payments, door-to-door parcel delivery and e-scooter sharing services via its mobile app. This is similar to Glovo, a Spanish app that has also taken advantage of the fact that people sometimes want parcel delivery within a day that cannot be achieved with conventional mail services.
"You suddenly have a real food delivery fight on your hands. Understandably so, because food has a ton of money to be made. The margins are pretty high," Florian Hoppe, who co-leads Bain & Company's digital practice in Asia Pacific, said.