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The Spoon

Daily news and analysis about the food tech revolution

Delivery Hero

Delivery Hero Heads to Japan via Its foodpanda Service

Slow down, Delivery Hero, I can’t keep up with all your news this week.

On the heels of multiple other announcements, the Berlin, Germany-based third-party delivery service said at the tail-end of yesterday that it is launching operations in Japan via its foodbanda subsidiary.

Through foodpanda, Delivery Hero will launch service in six cities to start: Kobe, Yokohama, Nagoya, Sapporo, Fukuoka, and Hiroshima. The company said in today’s press release that it plans to expand its Japan presence “continuously,” though an exact timeframe for other cities was not mentioned. The foodpanda service will, in addition to providing restaurant meals, also deliver groceries and household goods to users.

Including Japan, Delivery Hero now operates in well over 600 cities around the world, either under its own moniker or via subsidiary brands like foodpanda. And, as I said a minute ago, the company has been on a bit of a tear in terms of of news announcements this week. On Wednesday it said it plans to acquire fellow delivery service Glovo’s Latin America business, which will add several countries to Delivery Hero’s already existing presence in that region. Also this week, the company announced a new partnership with World Food Programme to integrate a donations feature into all of Delivery Hero’s digital properties, making it easier for users to donate meals to those in need.

Even with the expansions in Latin America and Japan, and even though it’s the world’s largest food-delivery service outside of China, Delivery Hero’s lead is far from guaranteed for the long term. The entire food delivery sector, which has been a saturated market for a long time, is undergoing consolidation right now. Takeaway.com’s recent merger with Just Eat has formed another massive food delivery company, particularly since that newly formed entity swooped up Grubhub in the U.S. Also in North America, Uber Eats agreed to buy Postmates. Back in LatAm, Colombian heavyweight Domicillios.com merged with Brazil’s iFood earlier in 2020.

Delivery Hero isn’t immune to all this competition. In fact, the company cited this saturated market and extreme competition in April when it pulled foodpanda operations out of Canada. On the flipside, though, Delivery Hero also bought Woowa Bros.’ Baedal Minjok service to give itself a larger share of the South Korean market. 

So whether it’s high-ranking spot in the food delivery world remains, the company is clearly expanding aggressively at the moment, and Japan won’t likely be the last country it lays claim to in the near future.

Delivery Hero Acquires Glovo’s Latin America Operations

Berlin, Germany-based Delivery Hero announced today it has acquired fellow third-party delivery service Glovo’s Latin American operations for €230 million (~$272M USD). The transaction is expected to close in the next few weeks, according to a press release from Delivery Hero.

The deal covers all Latin American countries in which Glovo operates: There is some overlap here, as Delivery Hero already has operations in Argentina, Panama, and the Dominican Republic. Acquiring Glovo obviously means Delivery Hero will widen its reach in Latin America considerably. 

Any delivery service aiming to enter or expand in the Latin America market will need to ensure they offer affordable options for restaurants. By some accounts, roughly 96 percent of independent restaurants in Latin America are not even online right now, and restaurant tech is far less developed than in, say, the U.S. and Europe. Even so, the Latin American market is the fastest-growing one outside the Asia-Pacific region.

Delivery Hero CEO Niklas Östberg said in today’s press release that Latin America “is a region with exceptional growth potential for online delivery.” 

The acquisition also means more consolidation for the Latin America food delivery sector. Glovo actually exited two Latin American markets earlier this year. Meanwhile, iFood and Domicillios.com merged in April and together compete with the other major player, Softbank-backed Rappi.

Delivery Hero’s last big acquisition was at the end of 2019 when the company bought its South Korean food delivery rival, Woowa Bros.’ Baedal Minjok service, for $4 billion. Prior to that, it had acquired InstaShop, an online grocery marketplace with operations in the Middle East and North Africa. Delivery Hero now operates in 44 countries worldwide.

Glovo will continue to operate its Latin America markets until March 2021, at which point, pending regulatory approval, they will become a part of Delivery Hero’s network.

Delivery Hero Partners With World Food Programme to Integrate Donations Into Its Apps

Berlin, Germany-based Delivery Hero announced today it has partnered with the United Nations’ World Food Programme (WFP) to integrate the latter’s ShareTheMeal program into its own delivery platforms.

WFP launched ShareTheMeal, also based in Berlin, in 2015. Anyone who downloads the app can use it to donate money that will go towards ShareTheMeal’s goal of getting 800 million meals to those in need over the next five years.

But since a growing number of folks nowadays already use delivery apps, ShareTheMeal and Delivery Hero decided to bake the donation functionality right into the delivery platform. Via an API, ShareTheMeal will be integrated into Delivery Hero’s apps. After placing an order, Delivery Hero customers will see a button that says “Donate a Meal.” Upon pressing it, they can choose from three different meal options based on how much they want to donate. The donation is tacked onto the total price at the checkout stage of the transaction.

The idea is to make the process of donating meals as easy and “seamless” as ordering delivery for oneself.

And it’s not the first time a third-party delivery services has tried donations. Uber Eats, for example, launched an in-app donation feature for restaurants early on in the pandemic. DoorDash, meanwhile, has partnerships with Copia, Replate, and other companies to divert food from landfills and redistribute it to those in need.

Delivery Hero is one of the world’s largest third-party delivery platforms outside of China, and a high-profile partnership with a UN subsidiary will hopefully translate to more meals donated around the world. To start, the ShareTheFood integration will be in Delivery Hero’s delivery platforms in Austria, Bulgaria, Finland, Malaysia, Norway, Romania, and Sweden. The company says more markets will follow soon.

Grubhub Could Soon Be the Center of a Third-Party Delivery Bidding War

Third-party food delivery service Grubhub has two potential European acquirers, according to an article from CNBC. Just Eat Takeaway and Delivery Hero have both expressed interest in merging with Grubhub, according to CNBC sources. 

The news comes shortly after Uber made an offer to buy Grubhub in May. At the time, we wrote that the combined forces of Uber Eats and Grubhub would potentially knock DoorDash out of the top spot in terms of marketshare in the U.S.

However, according to the CNBC article, that deal has been overshadowed by antitrust concerns, which would make getting regulatory approval on a deal much more difficult. A deal with a European company would likely get less scrutiny from regulators.

Just Eat was itself the center of a bidding war in 2019 between Takeaway.com and Naspers-backed tech firm Prosus. Takeaway.com won that battle. Prosus has a 22 percent stake in Delivery Hero, so if a bidding war breaks out over Grubhub, in a sense, those two companies will be going toe-to-toe once again.

CNBC’s sources said Grubhub is weighing its options and “mulling the right deal structure with potential buyers given market conditions and regulatory risks.”

For both Just Eat Takeaway and Delivery Hero, a deal with Grubhub would allow them to enter the U.S. market, where Grubhub is one of the main players along with Uber Eats, DoorDash, and Postmates. Grubhub has an especially large presence in markets like NYC and Chicago, which would give either of these European suitors automatic access to those audiences.

Meanwhile, all this is further evidence that consolidation for the third-party delivery market is here. Besides the Just Eat-Takeaway.com deal, 2019 also saw Delivery Hero buying South Korean service Woowa Bros. for $4 billion and Brazil-based iFood announcing a merger with Colombian delivery heavyweight Domicillios.com. 

iFood and Domicilios.com Merge to Take on the Latin American Food Delivery Market

Brazil-based food delivery service iFood announced this week it had purchased a controlling stake in Colombian service Domicilios.com, according to TechCrunch. The deal gives iFood a 51 percent equity stake the partnership, while Delivery Hero, which owns Domicillios.com, holds the remainder. Financial terms were not disclosed. 

Behind the purchase is iFood’s ambitions to compete more fiercely with Softbank-backed delivery service Rappi, which is based in Bogota, Colombia and currently holds the top spot in terms of market share in that country. The iFood-Domicilios.com merger gives iFood a larger geographic presence in Colombia — over 12,000 restaurants across 30-plus cities. It also brings the battle for food delivery dominance to Rappi’s home turf.

Prosus-backed iFood has raised nearly $600 million to date. Rappi has raised over $1 billion. Both companies also compete in the region with Uber Eats.

Carlos Moyses, iFood’s corporate vice president for Latin American operations, said in a statement that the company hopes to expand beyond its current markets of Colombia, Mexico, and Brazil. “We are growing faster than anybody else in LatAm.” 

Meanwhile, the Latin American market is the fastest-growing one for food delivery outside of the Asia-Pacific region, with sales from delivery quadrupling between 2014 and 2019. And with the coronavirus expected to hit the region especially hard, competition for customers is likely to intensify even more as the population hunkers down.

Fabricio Bloisi, iFood’s CEO, said Colombia, in particular, was a “strategic country” for the service, hence the merging with a service headquartered in that country. As for the rest of Latin America, this new consolidation should ensure competition is more fierce than ever when it comes to gaining and retaining customers.

Delivery Hero Agrees to Buy South Korean Food Delivery Service Woowa Bros. for $4B

Delivery Hero announced today that it has has agreed to buy South Korean food delivery rival Woowa Bros. for $4 billion, according to an article published on The Wall Street Journal. 

Berlin, Germany-based Delivery Hero is one of the largest restaurant food delivery companies in the world, operating in over 40 markets across Europe, Latin America, Asia, and the Middle East. But in South Korea, Woowa Bros. is even bigger, with its Baedal Minjok service holding a 75 percent share of the food delivery market. The company also builds its own food delivery robots (for which it raised $320 million in 2018) and is an investor in restaurant robotics company Bear Robotics.  

Currently, Delivery Hero’s Yogiyo food delivery app ranks second behind Woowa Bros.’ Baedal Minjok service in South Korea. The consolidation of the two companies means Delivery Hero will gain an even wider reach in Asia and especially South Korea — the world’s fourth-largest market for food delivery.

Competition in that market is fierce but rapidly consolidating. Even with 10 million active users in Korea, Baedal Minjok is still competing with e-commerce company Coupang, which is backed by SoftBank and launched a food delivery service this year. It will not, however, go toe-to-toe with Uber Eats, which shuttered its business in South Korea in September citing “competitive pressures.” The deal with Delivery Hero will be a boost for Woowa Bros. and also give Delivery Hero access to more potential users. It will also intensify competition within the food delivery space even more.

Even so, Delivery Hero CEO Niklas Oestberg said on an analyst call that he does not expect antitrust issues to surface as they have with Amazon’s recent investment in Deliveroo in the UK.

Deliveroo Shuts Down Service in Germany

In a move that underscores how competitive the food delivery landscape is getting, UK-based service Deliveroo announced it will pull its business out of Germany on August 16, according to TechCrunch.

In an email sent to Deliveroo users, the company noted it was “on a mission to create the very best food delivery service in the world,” adding that “where we cannot do this to the level that we expect and you deserve, we won’t operate.”

As TC notes, Deliveroo had shuttered services in smaller German cities about a year ago to focus on places like Berlin, Munich, and Frankfurt. The total exit from Germany is first time the company has completely shut down service in a country.

The move comes just a couple weeks after Netherlands-based delivery service Takeaway.com acquired UK-based Just Eat for about $10 billion, thus creating one of the world’s largest food-delivery companies with a leading presence in Germany along with Britain, the Netherlands, and Canada. The new company, dubbed Just Eat Takeaway.com, also has operations across Europe as well as Brazil, Mexico, and Australia. In 2018, Delivery Hero sold its German operations to Takeaway.com.

Deliveroo’s news today is no doubt in response to the massive merger, though the company said it didn’t rule out the possibility of returning to Germany at some point in the future. Deliveroo, which raised $575 million in May, said it would refocus its efforts on other markets in Europe and APAC.

The service will operate as normal until August 16, according to the email sent to Deliveroo users.