TOKYO - Japan’s food delivery industry is entering a new phase of fierce competition, with major operators locked in a prolonged battle over pricing and market share while profitability remains elusive, raising concerns about the future of domestic player Demae-can, whose stock has plunged roughly 97% from its pandemic-era peak.
Food delivery services, which allow customers to order restaurant meals via smartphone apps for delivery to homes and offices, expanded rapidly during the COVID-19 pandemic, but many companies have struggled to turn that growth into sustainable profits.
In Japan, the market is dominated by Demae-can and Uber Eats, while several smaller competitors continue to fight for share. Finland-based Wolt, which operated in Japan under the DoorDash group, withdrew from the Japanese market in March 2026 after just six years, highlighting the difficulty of operating a profitable delivery business in the country.
Demae-can’s shares once traded above 4,000 yen during the pandemic boom, but recently have hovered around 120 yen. The company is forecasting a net loss of 4 billion yen for the fiscal year ending August 2026, marking its eighth consecutive annual loss.
Analysts say the delivery business has long suffered from structurally weak profitability due to high labor costs for securing drivers, heavy spending on promotions and coupons, and intense competition for users.
Even during the pandemic, when demand surged, Demae-can remained deep in the red. In the fiscal year ending August 2020, the company’s sales rose 54% year-on-year, yet net losses expanded sharply to around 4.1 billion yen.
The business model itself remains challenging because delivery platforms often rely on markups added to restaurant menu prices to generate revenue. However, competitive pressure has begun eroding that pricing structure.
Industry observers point to the arrival of Rocket Now in January 2025 as a major turning point. Operated by a group company of South Korean e-commerce giant Coupang, the service aggressively promoted same-price ordering, allowing customers to purchase meals at the same price charged in stores.
The strategy intensified competition across the sector, forcing rivals to respond. Demae-can itself introduced a same-price ordering system in some regions from September 2025.
Companies are now increasingly offering free delivery and eliminating menu markups in an attempt to attract customers, though someone within the ecosystem must ultimately absorb those costs.
The industry appears to be following a familiar platform strategy in which companies prioritize expanding market share first, then attempt to raise prices or monetize users later once customer loyalty is established.
Even Uber Eats, widely viewed as one of the stronger players in the sector, still faces uncertainty over whether its delivery operations alone can remain sustainably profitable.
However, Uber Technologies has succeeded in improving profitability at the group level by expanding far beyond food delivery. The company reported adjusted EBITDA of 3.6 billion dollars from its delivery segment in 2025, up roughly 45% from the previous year.
Unlike Japanese rivals focused primarily on food delivery, Uber has diversified into ride-hailing, freight transportation, travel partnerships, and advertising within its app ecosystem. Restaurants can also pay to promote themselves to users browsing the app, creating additional revenue streams beyond delivery fees.
Analysts say scale is becoming increasingly important in the industry, giving global operators such as Uber a major advantage.
For Demae-can, possible future options could include restructuring, privatization under parent company LINE Yahoo, or focusing more heavily on smaller independent restaurants that global competitors may overlook.
Still, industry watchers expect the price war and market consolidation to continue, with weaker operators likely to disappear as the battle increasingly becomes one of financial endurance.
Source: Kyodo
