Analysis: Eat or be eaten? Food delivery apps have knives as pandemic boom wears off

  • Growth in food deliveries continues through winter
  • Analysts say loss-making industry ripe for consolidation
  • Take Out to Address Investors on U.S. Grocery Strategy
  • Deliveroo raises its forecast for the year after a strong third quarter

AMSTERDAM, October 20 (Reuters) – The meal delivery market is expected to see a phase of consolidation in the coming months as players seek to adjust their operations after the explosion in demand served to them during the pandemic of COVID-19.

The industry, which includes Uber Eats (UBER.N), Just Eat Takeaway (TKWY.AS) and Deliveroo (ROO.L), has typically seen stock prices soar in 2020 as lockdowns and other restrictions have forced people to eat at home.

Investor sentiment changed in 2021 in anticipation of a return to normal, but experts say consumers’ ordering habits have likely changed permanently.

“Use of the food delivery app hasn’t slowed down, although consumers are returning to in-person meals more frequently,” said Alisha Kapur of Similarweb, who analyzes web traffic and app downloads.

Still, most companies are losing money and the growing need for scale means the market is ripe for consolidation, industry experts say.

Kapur said it was “very rare” for a significant number of consumers to change the meal delivery apps they are accustomed to using, with a few exceptions which demonstrate that the biggest players are just seize more shares.

Stock prices in the sector have stabilized after the peak caused by the pandemic and many players have in fact seen them fall this year, also affected by developments such as a 15% cap on commission fees. they can charge New York restaurants, taxed in August.

While Amazon-backed Deliveroo raised its full-year forecast on Wednesday, its shares are still trading well below its IPO price of 390 pence in March. Read more

DIGESTING THE GRUBHUB

Just Eat Takeaway has seen the worst, however.

Its $ 7.3 billion acquisition of US rival GrubHub in June seemed smart about the new industry landscape, but it left the Dutch company heavily exposed to the New York ceiling, which it says will cost it approximately 100 million euros ($ 116 million) in the second half of this year. Read more

Takeaway stocks have fallen more than 20% this year, prompting a major long-term shareholder, Cat Rock, to ask management to sell assets and explore strategic combinations.

As a result, the company is at the center of discussions on industry agreements.

Potential acquisition targets, analysts say, include Takeaway’s 33% stake in iFood of Brazil, valued at more than $ 3 billion, part of its US operations, which require significant investment, and its French operations. , which follow Uber and Deliveroo in this market. .

Takeaway reported weaker than expected third-quarter orders last week, but CEO Jitse Groen said business was improving in several countries as workers returned to their offices and the weather worsened as time approached. Winter. Read more

Groen and other senior executives are due to meet concerned investors on Thursday to outline their strategy.

“Investors are looking for a clear improvement plan in the United States, a clear plan to defend market share in Europe, and particularly in Germany,” said Clément Genelot, analyst at Bryan Garnier & Co, who launched the coverage of Takeaway with a timed “Sell” recommendation in May.

“And also a clear vision and a clear plan to rapidly deploy grocery delivery.”

Takeaway said he was confident he would address key investor concerns, including an update on “portfolio management” and investment priorities, on Capital Markets Day.

“HANGING THE GROCERY”

Another hot area for business and industry partnerships is grocery delivery.

Deliveroo has been very aggressive in its collaboration with grocery chains, with the support of Amazon, a 12% shareholder.

Uber told Reuters that its meal delivery business was also “very focused on groceries,” underlining an agreement with Britain’s Sainsbury’s and France’s Carrefour.

Others are looking to take advantage of a blizzard of launches of “on-demand” grocery delivery startups, especially in Europe.

DoorDash (DASH.N) has invested in German Flink. Delivery Hero, one of Takeaway’s oldest competitors, said on Tuesday it had taken an 8% stake in another German startup, Gorillas.

Delivery Hero, a prolific investor, owns 7.4% of Takeaway and a 5.03% stake in Deliveroo. They also own 37% of Glovo, and the couple sold each other operations in the Balkans and Latin America during the pandemic.

The technology investor Prosus (PRX.AS) in turn owns 27.42% of Delivery Hero and a majority stake in iFood in Brazil, making the Prosus-Delivery Hero couple possible brokers.

($ 1 = 0.8604 euros)

Reporting by Toby Sterling; Additional reporting by Anna Rzhevkina, Zuzanna Szymanska, Paul Sandle; Editing by Pravin Char

Our Standards: Thomson Reuters Trust Principles.


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