Japan’s food delivery market faces shakeout as Uber Eats dominates

Japan’s food delivery industry, which saw a surge in new entrants during the COVID-19 pandemic, is undergoing a major shakeout as intensifying competition drives companies out of the market.

The sector has now largely consolidated around three players: U.S.-based Uber Eats Japan; Rocket Now operated by South Korean e-commerce company Coupang; and Japanese operator Demae-can.

Uber Eats remains the dominant player by a wide margin, raising concerns about growing market concentration.

“None of this growth would have been possible without our customers, restaurant partners and delivery partners,” said Yulia Brovkina, head of Uber Eats Japan, at a news conference in mid-October.

Uber Eats entered the Japanese market in 2016.

Leveraging its extensive global business network and strong brand recognition, the company has steadily expanded its presence. The cumulative number of orders in Japan surpassed 1 billion as of October.

According to U.S. research firm Sensor Tower, Uber Eats Japan has 6.2 million monthly active users (MAUs), a measure of the number of people using an app each month, giving it more than half of the domestic market.

Food delivery services expanded rapidly during the COVID-19 pandemic, when people increasingly avoided dining out.

At one point, more than seven companies were competing fiercely to attract customers.

However, costly promotional strategies, including discount coupons, weighed on their businesses, prompting a series of withdrawals after relatively short periods of operation.

Wolt, a Finnish food delivery company, ended its service in Japan in March this year, followed by Menu, operated by a KDDI subsidiary, at the end of September.

Demae-can is also struggling, having posted its eighth consecutive annual net loss in its consolidated financial results for the fiscal year ending in August.

Meanwhile, Rocket Now, which entered the Japanese market in January last year, has grown rapidly by offering delivery from more than 10,000 restaurants at the same prices as in-store purchases, with no delivery or service fees.

The cumulative number of app downloads surpassed 8 million in September, and the company has risen to second place in the industry in terms of MAUs.

However, Rocket Now’s entry has forced Uber Eats and Demae-can to adopt the “same price as in-store” model, intensifying what is increasingly becoming a war of attrition.

An industry expert warned that competition based solely on price could allow financially powerful companies to monopolize the market, potentially leaving consumers and restaurants worse off in the long run.