The battle over food delivery intensifies as Deliveroo prepares the list

The merger of the UK’s largest food ordering app Just Eat and its Dutch counterpart last year created this rare company whose name is also its strategy: persuading customers not to cook. at home or going out, but from Just Eat Takeaway.

The 2020 lockdowns created the perfect recipe for this ambition to come true. This is reflected in the rapid growth revealed by the full year results this week for JET and its British rival Deliveroo, following last month’s strong figures from Uber, DoorDash and Delivery Hero.

Just Eat Takeaway’s gross merchandise volume – a measure of consumer spending across its departments – grew 51% last year. Delivery Hero, the group that manages delivery services in 40 countries, and Deliveroo, which is preparing for a Initial public offering of $ 10 billion, both reported an annual jump of about two-thirds in customer spending. Uber Eats more than doubled its gross bookings, while DoorDash’s gross order volume in the marketplace tripled in 2020.

Each of these companies measures high-level activity on their apps in a slightly different way, making it difficult to make a true like-for-like comparison between the numbers.

However, an approximation of the relative market share can be obtained from the analysis of the anonymized payment data. According to Edison Trends, which tracks more than 2.5 million card transactions in the United States, DoorDash has gained share to the detriment of its rivals throughout 2020. It estimates that its market share has increased by about 27 basis points per week while its competitors, especially those on a smaller scale, lost.

The rise of DoorDash is also supported by Sensor Tower app download data – which can be used as an indicator to acquire new customers. It showed that the growth rate of the San Francisco-based company was higher every month of the past year compared to its competitors. In the UK, Deliveroo outperformed its peers on this measure.

Charts showing downloads of food delivery apps on the rise at the start of the pandemic

It is clear that the pandemic has overloaded the food delivery space. “The crisis seems to have lifted all boats,” said Andrew Gwynn, analyst at Exane BNP Paribas.

After the difficult first weeks of the pandemic, when many restaurants had to shut down completely, the online food companies that have done the best are the ones that operate their own fleet of couriers, like Deliveroo.

This logistical capacity allowed them to deliver food from places that had never subscribed to take-out apps before the pandemic. Tens of thousands of new restaurants and grocery stores joined Deliveroo last year to bring its total to 115,000, while Uber and DoorDash now have 675,000 and 450,000 individual stores and outlets that sell through their platforms respectively.

Chart showing that for food delivery companies, converting sales into profits is tricky

This left Just Eat Takeaway – which has traditionally left the pizzerias and kebabs that list on its app to deliver orders using their own staff – scrambling to recruit couriers. In recent months, for the first time, orange jacket racers from Just Eat have appeared on the streets of London to take on Deliveroo’s distinctive army of mopeds and cyclists clad in turquoise.

Due to Just Eat’s sharply reduced delivery campaign, which is normally among the most profitable food delivery companies has seen pre-tax losses jump 67 percent to 147 million euros. Most of its rivals posted even bigger losses, but Deliveroo and DoorDash were able to contain their marketing spend last year, which by some measures has brought them closer to profitability.

JITse Groen, managing director of JET, believes its more traditional restaurant and take-out customer base will leave it better off than its rivals when restrictions are eased. Coupled with the finalization of its merger with the American company Grubhub, it anticipates an “acceleration” in the growth of orders this year, even after the frenzy of the 2020s.

Treemap showing the size of the global food delivery market

“When the pandemic started, there was a pretty big increase in logistics orders in virtually all of our markets,” he said. “If you can’t go to a restaurant, you’ll place an order. So the reverse will happen when restaurants reopen. ”

Deliveroo Managing Director Will Shu retorts that even when restaurants were briefly allowed to reopen in the UK last summer, the London-based company “continued to grow rapidly and the frequency of consumer orders remained. high ”.

Nevertheless, Deliveroo and DoorDash are both warning of slower growth in customer spending this year.

“The problem I would have is the second half of the year,” Gwynn said. “They all need to grow the top line and that could be quite difficult.”

Additional reporting by Patrick Mathurin and Chris Campbell

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