Food Delivery Companies An Introduction
For Qualified Investors only Introduction
The Food Delivery industry is a highly competitive market that saw huge global growth in 2020 as the trend of eating at home was massively accelerated by stay-at-home orders during the Covid-19 pandemic. These transitions in consumer behaviour are likely to be a permanent change as people will continue to value convenience and selection.
The industry is hot with merger and acquisition activity, with 3 major deals being secured in 2020 alone. We expect competition to continue in the coming years, especially as companies expand into the emerging delivery markets for other industries, including pharmaceuticals, groceries, and other last-mile delivery services.
What is their Business Model ?
It is important to know that the product of these companies is not actually the delivery itself. Rather, they develop software for a food delivery marketplace and logistics platform. They do not actually employ their own drivers, but pay them as independent contractors. This allows them to avoid higher costs for wages and employer liabilities, freeing up more cash for crucial investments in marketing and advertising. However, this can change if local governments decide that delivery companies should reclassify their drivers as employees of the firm (like what happened with Uber and Lyft). Why are they Losing Money?
Since the industry is highly competitive, all delivery companies are currently sacrificing profits in order to secure market share. The companies reduce their prices to attract more customers, and in some cases they also need to reduce their margins to attract more drivers in order to continuously grow volume.
This content is for informational purposes only and does not constitute a solicitation, recommendation or endorsement to buy or sell any securities.
For Qualified Investors only US Market
DoorDash is the dominant force in the highly competitive US market. In 2020, the company along with its Caviar subsidiary (acquired from Square in 2019) had control over roughly 50% of the US overall, and performed even better in the suburbs with a 58% stake. DoorDash has roughly 18 million users, along with 5 million subscribers for the premium DashPass service. The company generated $2.88bn revenue in 2020, of which 100% came from US operations.
Uber is the next biggest contender in America. The technology company’s UberEats service, along with its acquisition of Postmates, was able to secure roughly a 33% DoorDash is more than only food share of the US market in 2020. Postmates is considerably delivery. The company has recently more prominent in urban markets. Uber’s “delivery” expanded into other spheres by segment generated $3.9bn of revenue globally in 2020, of leveraging its logistics platform to provide which approximately $2.3bn came from the US. last mile delivery for companies looking to outsource. They have partnered with pharmacies like CVS and Walgreens to Grubhub is a pure play, and the third largest contender in deliver non-prescription essentials, and US food deliveries. It’s acquisition of Tapingo, a US college are also expanding into on-demand campus food ordering service allowed it to expand into the grocery delivery. DoorDash and its other student market. The company currently only possesses a industry competitors still have significant 16% overall stake in the US, but is clearly dominant in urban room for expansion into other delivery markets. The company generated $1.8bn revenue in 2020. A areas in the coming years. takeover of the company has been planned by JustEat- Takeaway for $7.3bn.
The Other Guys Classical delivery services include pizza companies like Dominos & Papa John’s. These companies have been in the game for years, but are restricted to their own company in terms of delivery capabilities.
For Qualified Investors only Chinese Market
There are two main competitors in the Chinese market: Tencent backed Meituan and Alibaba’s Ele.me. These are the two largest delivery companies in the world.
Meituan is a massive online shopping platform active in consumer products and various retail services industries. It’s delivery platform has over 290 million active monthly users, and 600 million registered users which place an average of 28 million orders daily. The company has around 42% of the Chinese market and generated roughly $10.2bn revenue in 2020, of which approximately 60% came from deliveries.
Ele.me is currently a pure catering and food delivery platform that was acquired by Alibaba for $9.5bn. It has gained the majority of the market share in China with a 53% stake following the takeovers of rival delivery companies Baidu Weibei and Koubei, and now has over 200 million active monthly users. The company has recently seen interest from German supermarket chain ALDI and other foreign retailers to expand into grocery delivery.
March 18, 2021 4 European Market
Just Eat-Takeaway.com is by far the most dominant player in Europe, following the merger of the two biggest competitors. The merged company controls roughly 50% of the entire European food delivery industry, and also leads in the UK but by a smaller margin with only 37% of the market. The company is also scheduled to expand into the US with a $7.3bn deal acquiring Grubhub, which would make it the biggest delivery company outside China.
Deliveroo is the next biggest player in Europe, with roughly a 21% slice in Europe overall, but has a significantly larger portion of the UK market with 33%. Deliveroo earned $5.7bn of total revenue in 2020. The company is set to IPO on the London Stock Exchange soon, and is expected to be valued at roughly $7bn.
UberEats is the third biggest player and hot on the heels of Deliveroo, with an 18% stake in Europe and 24% in the UK. The tech company’s delivery service is the most international player in the industry globally, operating in hundreds of cities on 6 continents.
Delivery Hero is the smallest player in Europe, with only a 6% entire market share. It operates in 40 different countries, across Europe, Asia, Africa, and the Americas. The company generated approximately $2.7bn in total revenue in 2020, about $270 million of which came from European operations. The company’s European market share has declined in recent years, but it remains a considerable contender.
HelloFresh is a food delivery company with a slightly different business model. The company provides customers with pre-portioned ingredients and recipes on a weekly basis via subscriptions. The company had $4.5bn in global revenues in 2020, coming from operations in 14 countries.
For Qualified Investors only CompSheet
Mkt Cap Revenue Est. PE - 12M Est. Name Ticker Exc EV ($bn) Est. EV/Sales ($bn) ($bn) Fwd EV/EBITDA Meituan 3690 HK 252.57 14.1 246.2 194.0 139.6 8.6 Uber Technologies Inc UBER US 109.55 11.1 113.5 na -914.4 6.6 DoorDash Inc DASH US 46.60 2.9 42.4 na 249.9 10.9 Delivery Hero SE DHER GY 31.13 1.4 30.2 na -77.6 4.9 Just Eat Takeaway.com NV JET LN 15.16 2.3 15.2 na 108.3 3.2 Domino's Pizza Inc DPZ US 13.91 4.1 18.1 27.0 20.7 4.2 HelloFresh SE HFG GR 12.56 4.3 12.1 34.9 19.0 2.1 GrubHub GRUB US 6.39 1.8 6.6 106.1 28.9 2.9 Papa John's International Inc PZZA US 2.88 1.8 3.5 39.1 18.2 1.9 Marley Spoon AG MMM AU 0.50 0.3 0.5 na 83.1 1.2 Blue Apron Holdings Inc APRN US 0.14 0.5 0.1 na na 0.3 Roofoods Ltd 1022770D LN 0.00 1.5 na na na na
Roofoods Ltd. is the holding company of Deliveroo and is in the process of being listed in the UK.
Marley Spoon and Blue Apron are two smaller competitors of HelloFresh.
This content is for informational purposes only and does not constitute a solicitation, recommendation or endorsement to buy or sell any securities.
For Qualified Investors only Investment Solutions
Phoenix Memory One Star on Meituan, DoorDash, Delivery Hero USD, 24 Months, One Star 120%, 16.0% p.a., Coupon with Memory, 50% European Barrier, 100% Autocall Barrier, Quarterly Redemption
Market Anticipation Investment Rationale - The investor anticipates a bullish, stable or moderately - The investor is looking for an income and equity-linked product bearish market - The investor expects to receive a conditional positive return in bullish or stable markets - The investor believes the underlying's volatility will be - The investor may receive the capital by anticipation in case all the underlying are above a stable or decrease certain trigger level - The investor wants the capital to be protected in case of a moderately bearish scenario
Product Description Product Information Coupon Payment Currency USD Autocall Trigger 100% Every quarter, Maturity 24 Months Frequency Quarterly - If all the Underlying are at or above their Coupon 16.0% p.a. Strike 100% respective Coupon Barrier, the investor receives the Coupon Frequency Quarterly Prot. Barrier 50% - Else, if at least one Underlying is below its Coupon Barrier 50% Prot. Type European Coupon Barrier, no Coupon is paid - If a Coupon is to be paid, the investor will Memory Effect Yes One Star 120% receive any potential previously missed Coupon(s) Underlying Information Name BBG Ticker Country Currency Early Redemption Meituan 3690 HK Hong Kong HKD Every quarter, - If all the Underlying are at or above their DoorDash DASH US United States USD respective Autocall Trigger, the product early Delivery Hero DHER GY Germany EUR redeems at 100% - Else, the product continues to the next observation date Advantages Considerations
Final Redemption - Conditional Coupon : investors can receive - Capital is not protected: at maturity, the At maturity, an enhanced Coupon at each observation redemption value may be lower than the date amount initially invested - If all the Underlying are at or above their respective Protection Barrier, the investor - Coupon recovery mechanism : the missed - Conditional return: coupon is conditional receives 100% of the nominal Coupon(s) can be paid later to the investors and the investor may not receive all the - Else, if at least one Underlying is at or above coupons its One Star Level, the investor receives 100% of - Conditional capital protection: the the nominal investment is partially protected against - Total return : the maximum profit is limited - Else, if at least one Underlying is below its moderate losses of the Underlying to the coupon rate Protection Barrier, the investor receives a Physical Settlement of the Worst Performing - Early redemption mechanism : investors can - Entitlements: the investor will not receive Underlying receive the initial invested capital prior to any dividend or any further entitlement - The number of stocks delivered will be equal maturity linked to the Underlying to Denomination x FX Rate / Strike Price of the Worst Performing Underlying - Issuer risk : The investor bears a credit risk - The fractional number, if any, will be paid in on the issuer cash in the Denomination Currency
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