Yet more regional consolidation is underway among the giants of take-out and delivery startups in Europe as they gear up to compete more aggressively against newer entrants like Deliveroo and Uber Eats. Today, Berlin-based Delivery Hero announced that it is selling its UK business, which operates as hungryhouse, to rival Just Eat for £200 million ($251 million) in cash, plus another £40 million ($50 million) on top of that based on hungryhouse’s performance between now and the date of the deal closing (subject to approval by the competition regulator).
Separately, Just Eat also announced that it would be acquiring SkipTheDishes, a delivery startup in Canada, for £66.1 million ($83 million), to expand its position there.
The two deals come just five days after Delivery Hero — which was last valued at just over $3 billion — announced that it would acquire Foodpanda, another global rival, from Rocket Internet for an undisclosed amount of money. It seems now that the deal in part is to help finance the other transaction. The Foodpanda acquisition strengthens Delivery Hero’s operations in Europe, South America and Asia.
The UK market has been a particularly crowded one for food delivery and take out startups. In addition to Just Eat and Delivery Hero, there are newer entrants like Uber Eats and Deliveroo. The latter two focus on a smaller and higher end selection of restaurants and have as such been eating into the margins and market share of older players, who have taken more of a catch-all approach to the business of takeaway.
That, incidentally, has also been the strategic approach for many of these earlier businesses also when it came to expansion: scale as fast and as globally as you can to improve margins by dominating in all markets (an approach followed by many other on. In the case of the UK, Delivery Hero first entered the country when it acquired hungryhouse in 2011, with the business first getting its start in 2006.
But the bigger strategy, however, appears to have changed somewhat, as players like Just Eat and Delivery Hero look to sell off assets in certain regions to help build up their presence in others. This week is not the first time that we’ve seen these companies trading off and selling companies to each other. Previous deals have included Rocket Internet both buying operations from and selling operations to Just Eat,
“The sale of hungryhouse to Just Eat rationalizes our global footprint, and we remain focused on operating market-leading brands, globally,” said Niklaus Ostberg, CEO of Delivery Hero. “Proceeds from this sale will allow us to pursue further global growth opportunities, as we have consistently and successfully done in recent years. We also want to thank the entire hungryhouse team – this transaction reflects their amazing achievements within the Delivery Hero Group since 2011.” Just Eat said it expects hungryhouse to generate EBITDA of between £12-15 million in 2017, excluding one-off exceptional transaction and integration costs of around £1 million.
That’s not to say that these companies are winding down that much or getting any less global in the wider sense — not for now, at least.
Just Eat in Canada is a case in point. The company already claimed to be the number-one take-out company in the market, and it sees the acquisition as a way to strengthen that position.
“The acquisition of SkipTheDishes will materially strengthen Just Eat’s number one position in Canada,” said David Buttress, CEO of Just Eat, in a statement. “Canada is a phenomenally exciting country for online food delivery, with significant runway for growth and a clear opportunity to drive channel shift. SkipTheDishes’ outstanding team, technological know-how and operational excellence has enabled it to develop a business model well-suited to Canada’s unique market conditions. It will complement our existing operations so that Just Eat is best-placed to address this fast-growing market.” SkipTheDishes projects revenues of 23.5 million Canadian dollars for the current year ending December 2016, with a network of 2,900 restaurants and 350,000 active customers.
Delivery Hero says that its wider footprint covers 17 million active users and 271,000 restaurants in 27 countries in Europe, the Middle East, Latin America and the Asia-Pacific region. In addition to take out ordering, Delivery Hero also offers premium food ordering and delivery in 51 cities across 10 countries.
Just Eat, which went public in 2014, is based out of London, and says that it covers 16.6 million users and more than 63,900 take-out restaurants.