Aller au contenu principal

Equity Research

Hungry for growth?

Over the past few years, the food delivery space has grown significantly by becoming habitual to consumers. The sector’s growth has been driven by the advent of appealing, user-friendly apps and tech-enabled driver networks, coupled with changing consumer expectations and further boosted by the COVID pandemic.

According to McKinsey, in the US, the food delivery market more than doubled during the pandemic following a healthy 8% growth historically. Globally, the industry has tripled since 2017 with estimates valuing the market above $300bn in 2022.

Buoyed by the availability of cheap Debt and Equity to fund growth, many new entrants appeared across the globe whilst a host of M&A and incumbents scaled up their business by landing in as many regions as possible. However, the sector’s growth is slowing, and the rate environment has changed, causing consolidation to take place. Data from Statista on meal delivery growth shows that before 2022, growth rates were double-digit but this will become more normalised going forward.  

This new environment has resulted in companies exiting markets and cutting headcount to realign their businesses.   

Most recently, Deliveroo left the ‘Roo’ as it announced a decision to end operations in Australia, citing the need to have a more disciplined approach to capital allocation. This follows its recent decision to also leave the Netherlands.

The company said in its statement, that it has determined that it cannot reach a sustainable and profitable scale in Australia without considerable financial investment, and the expected return on such investment is not commensurate with Deliveroo’s risk/reward thresholds.

In the past 12-months, we’ve seen a host of food delivery companies exit markets and slash headcount:

Delivery Hero – Back in December 2021, Delivery Hero announced they would exit six cities in Germany and divest Japanese operations.

Just Eat Takeaway – Sold its Brazilian food service stake for £1.5bn, exited Norway and Portugal in April followed by Romania in May and is looking to sell its US business (Grubhub).  

Uber Eats – Uber exited India via its stake in Zomato and cut back on restaurant delivery in Brazil.

Getir – Planned to reduce its global headcount by 14% and “reduce the size of our global organisation”.

Gorillas – Reducing headcount by 300 employees and evaluating a possible exit from Italy, Spain, Denmark and Belgium whilst it shifts its focus to more profitable market like US, UK and Germany.

Zapp – Cuts its headcount by 10%.

Grab – The company brings down its “regional headcount”, steps away from its super-app strategy and exits its GrabKitchen business unit.

REEF Technology – Laid off 5% of global workforce amid internal restructuring and reports it is “suffering from a lack of cash flow”.

JOKR – Leaves the US to focus on LatAm.

HelloFresh – Shuts down its Bay Area production facilities, laying off more than 600 employees.

Zomato – Layoffs across department with the co-founder also quitting. The company pulled out of international market last year to focus on India.

Indeed, the underlying consumer trends remain within the food delivery sector but at a slower pace and the way incumbents will act should reflect this. Having once been a hive of M&A, activity may now be more muted with growth at any cost a thing of the past. We might also start to see some of the ‘fat’ trimmed at the edges, in particular the private companies who could struggle for additional funding. The focus will now be on winning market share within core regions and ensuring marketing spend is targeted. For consumers, this could be a positive as they are offered more service options and discounts. Finally, from an investor perspective, the focus should now be on a business’s ability to win market share in core markets and ensure they can reach profitability.

Information importante

N'hésitez pas à vous adresser à votre interlocuteur privilégié chez Mirabaud ou à nous contacter ici si ce sujet vous intéresse. Avec nos spécialistes dédiés, nous nous ferons un plaisir d'évaluer vos besoins personnels et de discuter des éventuelles solutions d'investissement qui seraient adaptées à votre situation.

Continuer vers

Ces articles peuvent également vous intéresser

Choisissez votre langue