Annual financial statement and combined management report Delivery Hero SE As of December 31, 2018 1 COMBINED MANAGEMENT REPORT COMBINED MANAGEMENT REPORT Try out our interactive table of contents. You will be directed to the selected page. COMBINED MANAGEMENT REPORT ANNUAL REPORT 2018 A. GROUP PROFILE food ordering platforms, the Group also offers own deliv- 02. CORPORATE STRATEGY ery services to restaurants without this capability. The own 01. BUSINESS MODEL delivery fleet is coordinated using proprietary dispatch Delivery Heroʼs operational success is a result of the vision software. and clear focus to create an amazing on-demand experi- The Delivery Hero SE (the “Company”) and its consolidat- ence. While food delivery is and will remain the core pillar ed subsidiaries, together Delivery Hero Group (also DH, Delivery Hero generates a large portion of its revenue from of our business, we also follow our customersʼ demands DH Group, Delivery Hero or Group), provide online and online marketplace services, primarily on the basis of forn a increasing offering of convenience services. Con- food delivery services in over 40 countries in four orders placed. These commission fees are based on a con- sumers have ever higher expectations of services like ours geographical segments, comprising Europe, Middle East tractually specified percentage of the order value. The per- and because of this we are focusing more and more on and North Africa (MENA), Asia and the Americas. centage varies depending on the country, type of restau- broader on-demand needs. We have therefore upgraded rant and services provided, such as the use of a point of our vision accordingly to: Always delivering amazing Following the conversion from a German stock corpora- sale system, last mile delivery and marketing support. experiences – fast, easy and to your door. tion (Aktiengesellschaft, AG) to a European public ­company (Societas Europaea, SE), which became effective with the In addition to commissions, Delivery Hero generates Amazing Food: Ensuring the right quantity, quality entryn i the commercial register on July 13, 2018, the Com- non-commission based revenue in particular with premi- and variety of restaurants in every neighborhood pany has been trading as Delivery Hero SE with its regis- um placements. Premium placement means that, for a fee, In order to meet the demands of our customers, Delivery tered office in Berlin. Further information on the Group restaurants are ranked on top among all the listed restau- Hero first needs to determine what they are looking for, structure and segments can be found in the chapters rantsn i their relevant delivery area displayed in a specific by focusing on three key factors: quantity, quality and vari- “Group structure” and “Segments”. manner. Furthermore, Delivery Hero generates revenue ety. Delivery Hero analyzes cuisine type data in a given from delivery fees. neighborhood and ensures that a sufficient number of The subsidiaries of the Group operate internet platforms restaurants of each type is available on the platform. under various brand names, where users of the platform Alongside the management of the Group, Delivery Hero SE Delivery Heroʼs data-driven approach is actively managing are referred to restaurants and provided with food deliv- assumes a range of IT, marketing and other services, in the restaurant offering to optimize the product on a local ery services. The Delivery Hero internet platforms are particular commercial and technical consultancy services. level and improving choice based on demographic char- alignedo t the demands of the local end customers who In addition, as a holding Delivery Hero SE assumes func- acteristics (for example density) and demand. can choose from a wide range of menu items from restau- tions such as Group controlling and accounting, public rela- rantsn i their neighborhood. Orders can be placed by app tions, investor relations, risk management and human The number of restaurants grew 53% in 2018 offering a or via website and are subsequently paid either in cash or resources management. wide choice to the customers. This expansion is also driv- via online payment methods. As an option, Delivery Hero en by the continued rollout of own delivery capacities that offers its partner restaurants point of sale system in order The Delivery Hero Groupʼs business model is based on the allows Delivery Hero to connect restaurants to the plat- for o them t immediately view and accept orders made on visionf o the management team to provide platform users form that customers did not have access to before. the platform. Furthermore, Delivery Hero offers products withn a amazing on-demand experience. This includes an and services for restaurants, such as food packaging, appealing and seamless handling of the order as well as a advertising and printing services. In addition to the online first-class quality of food and a top delivery service. COMBINED MANAGEMENT REPORT ANNUAL REPORT 2018 Amazing Ordering: Ensuring the ordering experience operations. For full transparency to the customers Delivery Once up to scale, Delivery Hero observes a similar gross is convenient, inspirational, simple and personalized Hero improved the reliability of the live tracking and sta- profit contribution per order when Delivery Hero provides Delivery Hero is passionate about taking the customersʼ tus update feature. own delivery services for third-party delivery. ordering experience to the next level. Each day Delivery Hero focuses on simplifying and personalizing the prod- Moreover, in 2018 Delivery Hero continued to roll out the Shared & Virtual Kitchens uct. restaurant and rider technologies globally. Delivery Hero has continued to test shared and virtual kitchensn i selected cities globally. Shared and virtual kitch- In 2018, Delivery Hero continued to focus on key product Third Generation Delivery Company: ens allow Delivery Hero to lever further the operational improvements especially around personalization and rec- Innovation as Part of the DNA expertise and breadth of data in order to reach new levels ommendation features which were rolled out to 23 coun- Delivery Hero is particularly proud to hold innovation at of restaurant efficiencies and economics versus the tradi- tries by the end of the year. Delivery Hero was able to lever the core of its culture, as it is the key strength when it tional brick and mortar type of restaurants. on millions of data points from customers in the 41 coun- comes to tackling a trillion-dollar food delivery market tries of operation. Artificial intelligence backed systems opportunity, that is still very much in its infancy. Eventually, Delivery Hero will get to a point where the cus- and advanced technology allows Delivery Hero to improve tomer can have food delivered in higher quality and at low- the ordering experience with every order that Delivery Hero As a result, 2018 Delivery Hero saw a roll out of many new er costs. This proposition will give further leeway for processes. features and additional products, driving trends that were growth by underpinning customer ordering behavior. developing in the delivery sector. This continuous focus Amazing Service: Ensuring that food is delivered on innovation will ensure that Delivery Hero is able to pro- Delivery of Additional Convenience Items quickly, reliably, and can be tracked in real time vide the customers with the most convenient, personal- Delivery Hero has also developed technology and execu- Delivery Hero strives to provide fast and reliable service to ized takeaway experience. tion capabilities that allow the delivery of other on- demand the customers with real-time updates. Delivery Hero tightly items such as groceries, flowers etc. This offering is driven manages all steps in the food delivery lifecycle, including The bigger consumer demand for on-demand type of ser- by increased consumer demand for on-demand services. transmission, delivery and post-order services. Delivery vices encouraged Delivery Hero to extend the product Delivery Hero continues to roll out these capabilities in Hero is deeply integrated with the operations of the restau- offering beyond the core online food ordering business selected markets. As a result, Delivery Hero has seen an rant partners, which allows Delivery Hero to learn the cook- model. In 2018, Delivery Hero took the decision to become increase in order by adding additional convenience items. ing times of the dishes and ensure the food is ready exact- a third-generation delivery company. Driving those inno- ly at the time the delivery rider arrives at the restaurant, vations will allow the platform to reach new levels of cus- Based on customer demand and feedback Delivery Hero all to improve speed, reliability and food quality. tomer frequencies and retention rates. is able to obtain valuable insights relevant for the intro- duction of additional verticals to the product offering. Delivery Hero works to improve the delivery experience to Own Delivery the customers by providing the restaurant with a propri- In 2018, Delivery Hero scaled delivery capabilities globally. etary “Restaurant Partner Solution (RPS)” technology that By the end of 2018, Delivery Heroʼs riders were delivering allows for better management of the delivery process and over 7 million own delivery orders per months at improved improves the efficiency of Delivery Heroʼs own delivery efficiencies. Furthermore, Delivery Hero now offers deli- very in over 200 cities globally. COMBINED MANAGEMENT REPORT