Food delivery’s old consolidation model is cracking in East Asia

Momentum Works has published a report on East Asia’s food delivery industry, highlighting a significant leadership transformation as Delivery Hero’s acquisition-driven expansion faces mounting challenges from local operators with advanced operational strategies.

The Singapore-based venture firm’s “Food Delivery Platforms in East Asia 2026” report reveals that Hong Kong, Taiwan, South Korea, and Japan generated approximately US$38.6 billion in food delivery platform gross merchandise value (GMV) in 2025. South Korea dominated with US$28.3 billion (73% of total), followed by Japan (US$4.1 billion), Taiwan (US$3.6 billion), and Hong Kong (US$2.6 billion).

The report emphasizes that market success is not solely dependent on factors like income levels or urban density but rather on how platforms aggressively build supply chains, manage subsidies, enhance logistics efficiency, and integrate delivery into broader consumer ecosystems. This insight is particularly relevant for Southeast Asia, where dominant players such as Grab, Gojek, ShopeeFood, and LINE MAN Wongnai grapple with profitability, competition, and regulatory challenges. While Southeast Asia’s online transport and food segment reached US$28 billion in GMV in 2023, growth has increasingly prioritized unit economics and ecosystem retention over aggressive expansion spending.

Challenges for Delivery Hero’s Acquisition Strategy

Delivery Hero expanded its presence in Asia by acquiring local market leaders, securing positions in Hong Kong, Taiwan, and South Korea, though it exited Japan. However, Momentum Works argues this model is reaching a critical juncture. Foodpanda Taiwan is set to be acquired by Grab, Baemin in South Korea is seeking buyers, Foodpanda has ceded ground in Hong Kong, and Delivery Hero has withdrawn from Japan entirely.

While acquisitions created scale in some markets, the report notes that mere consolidation falls short against competitors investing in operational depth. These rivals are shaping demand through pricing models, merchant coverage, rider efficiency, subscription services, and complementary offerings. “Food delivery success isn’t determined by a market’s development level,” said Jianggan Li, CEO of Momentum Works. “These four markets appear similar on paper, yet their outcomes diverge sharply. Market readiness is just a prerequisite. Operators’ relentless efforts drive actual growth.”

The disparity between Japan and South Korea underscores this point. Both are affluent, urbanized, and have mature foodservice sectors, yet food delivery penetration stands at roughly 3% in Japan versus over 20% in South Korea.

Keeta’s Disruption in Hong Kong

Hong Kong exemplifies how aggressive entrants can reshape even established markets. Meituan’s Keeta launched in 2023, focusing on subsidized single-serving meals, rapid merchant onboarding, and network density. Within 29 months, it achieved profitability and surpassed Foodpanda. This shift from broad subsidies to operational efficiency mirrors Meituan’s evolution in mainland China amid intense competition.

Hong Kong’s transformation is instructive for Southeast Asia, where cities like Singapore, Bangkok, Jakarta, and Ho Chi Minh City have entrenched platforms. However, fee structures, rider supply, and restaurant participation remain critical factors. A well-funded entrant with a focused strategy can still disrupt the status quo. Keeta’s expansion also highlights Meituan’s status as a leading Asian platform, akin to global players like Uber Eats and DoorDash, but with a superapp approach reinforcing consumer engagement.

Grab’s Strategic Test in Taiwan

Taiwan represents a pivotal case for Southeast Asian operators, as Grab plans to acquire Foodpanda Taiwan. Momentum Works characterizes the market as a profitable duopoly with stagnant 10% penetration and 5.5% growth since competitive pressure waned. Regulatory hurdles, such as antitrust concerns blocking Delivery Hero’s prior attempt to sell to Uber Eats, reflect broader consolidation challenges in Asia.

Grab’s foray into Taiwan raises questions about reinvigorating growth in mature markets versus inheriting existing platforms. Its experience in Southeast Asia—battling diverse competitors across markets with varying labor laws, payment systems, and restaurant structures—has emphasized profitability through service bundling, including mobility, finance, subscriptions, and advertising. However, Taiwan’s unique consumer expectations, merchant dynamics, and labor regulations mean Grab must adapt beyond its regional playbook.

South Korea and Japan: Market Extremes

South Korea leads East Asia’s food delivery market, with its US$28.3 billion sector rooted in entrenched consumer habits rather than platform innovation alone. Baemin, owned by Delivery Hero, maintains market leadership, but Coupang Eats has gained traction by integrating grocery, e-commerce, logistics, and membership programs to subsidize delivery frequency and loyalty—a strategy echoing Southeast Asia’s platform ecosystems.

Japan, despite its density and wealth, lags with low food delivery adoption. Its convenience store culture, affordable prepared meals, and solo-dining norms reduce delivery’s appeal. Coupang’s Rocket Now is testing affordable single-person deliveries, but Japan has historically posed challenges for both global and regional platforms.

Momentum Works concludes that Asia’s next phase of food delivery competition will favor operators honed by competitive domestic markets over financial consolidators. “Ownership alters the balance sheet, not competitive dynamics,” Li stated. “Whichever entity holds these assets must still compete against operators with years of experience in cutthroat environments.” For Southeast Asia, the lesson is clear: success hinges on building merchant density, maintaining profit margins, navigating regulations, and embedding delivery within expansive consumer ecosystems. East Asia is now a proving ground for this evolution.

Source link