One of the growing concerns for urban planners and public health officials in major global cities has been the environmental and health impacts associated with the explosive growth of the app-based food delivery sector. Nearly one-third of all restaurant meals in urban centers are now ordered via digital platforms, with municipal authorities estimating that delivery-related motorbike and moped traffic contributes significantly to local air pollution and urban noise. Furthermore, the rapid growth in single-use packaging from takeout meals has led to thousands of tonnes of extra commercial waste annually, with municipal councils bearing the clean-up costs. Fig. 2.1 illustrates the varying levels of digital food delivery penetration across different global cities.
Fig. 2.1 – Percentage of total dining sector revenue generated by digital delivery platforms in selected metropolitan areas (2023)
| Metropolitan Area | % of dining sector revenue via digital delivery (2023) |
|---|---|
| Rome | 15 |
| Tokyo | 18 |
| Berlin | 20 |
| Paris | 22 |
| Sydney | 29 |
| London | 34 |
| Singapore | 38 |
| New York | 41 |
| San Francisco | 45 |
| Seoul | 48 |
In response to the surge in delivery traffic and dark kitchens (commercial kitchen spaces that prepare food solely for delivery, with no dine-in facilities), urban regulators have begun implementing tighter controls. Some cities have introduced strict zoning restrictions on dark kitchens, limited moped access to residential streets at night, and proposed mandatory recycling quotas on delivery platforms. However, these regulations have faced resistance. Industry advocates argue they stifle culinary innovation, limit choice for busy professionals, and harm low-income riders who rely on app-based work for flexible income.
At the same time, the structure of the restaurant industry is undergoing a profound shift. The development of delivery-only "dark kitchens" has bypassed the need for expensive high-street commercial premises, front-of-house staff, and physical customer areas. Startups can establish virtual food brands with very low sunk costs, utilizing third-party delivery networks (such as Deliveroo, Uber Eats, and Just Eat) to handle logistics. This has dramatically lowered barriers to entry, making the retail food services market highly contestable. However, traditional dine-in restaurants argue that these delivery platforms charge predatory commission rates (often up to 30% per order), squeezing their profit margins and forcing many historic local eateries out of business.
Using the information in Extract 2 and your economic knowledge, evaluate whether economic agents benefit from the food preparation and delivery market becoming more contestable.
