As consumers in some countries are allowed out “on a long leash”, they’ll be heading for restaurants. So, is that the end of accelerated Covid-induced growth for the meal delivery and, indeed, grocery delivery companies? Likely not as there continues to be apprehension about close social contacts and the delivery companies have done a good job getting food to us whenever and wherever we want it. Immediate delivery comes at a price and that won’t suit every household. As we enter our second Covid year, the income differences between the “Haves” and Have Nots” will become increasingly clear.
Investors have taken a more dyspeptic view of the meal delivery sector. Deliveroo’s stock market debut in London (March 31st) was an unappetising flop when shares in the company slumped by 26% on the first day of trading, cutting its market value from £7.6bn to £5.6bn and by late-April, its market cap. was a miserly £4.4bn. Deliveroo is active across Europe, the Gulf States, Hong Kong and Singapore, and Australia and New Zealand. Investors had been spooked by a February decision of the UK’s High Court to consider Uber drivers as employees and not self-employed which is considered a considerable set back for companies in the “gig economy”. Further, analysts view that: competition in its major markets (e.g. in UK – jousting with Just Eat and Uber Eats) is harsh, notwithstanding that Deliveroo revenues increased sharply in 2020 (Covid-driven) and the company is testing complementary service options, such as rapid delivery of groceries with Sainsbury’s (mind you, so is UberEats!); and they were wary of the extra voting rights that Deliveroo’s founder and CEO, Will Shu, has linked to his own personal share ownership.
Not everyone thinks that the food delivery market is too crowded. Getir, Turkish pioneer of ultrafast grocery delivery, has just completed a $300m funding round, only 2 months after netting $128m in a previous round and has achieved “Unicorn” status – with a current valuation of $2.6bn. The latest capital injection is to fuel its exponential growth in Turkey, and the UK (entered very successfully in January, 2021), and its anticipated entry into Germany, France and The Netherlands (in the next few months). Getir is an ultrafast delivery pioneer revolutionising last-mile delivery with its 10 minute grocery delivery proposition. Getir delivers a selection of 1,500 everyday items to its customers 7 days a week day and night. Its founder is the founder of Turkey’s leading Taxi App.
Competition is hotting up in meal and grocery delivery around the world, not least in Asia where having a meal delivered to the home is a much more common practice than in Europe.
- There’s 2 massive deals about in SE Asia this month: in Indonesia, Tokopedia and Go-Jek are combining to form GoTo in a $18bn merger to create a mega online shopping, ride hailing, food delivery, card payment company; and Singapore-based Grab (who bought out Uber in SE Asia) which offers even more comprehensive online services than Indonesia’s GoTo is about to announce a $40bn IPO
- Food ordering platform Swiggy from India has launched a “Health Hub” aimed at making eating healthy food convenient as a means of differentiating itself from the competition. This hub offers over 9,000 healthy dishes from 700 restaurants in its home city Chennai and is extending its services in other major Indian cities.
- In the USA, goPuff is expanding its quick delivery offer of 2,500 grocery products, with a capital injection of $1.5bn from the venture capital markets.
- DoorDash, the restaurant meal delivery platform market leader in the USA (50% market share) is on the acquisition trail purchasing salad-making robotics company Chowbotics. DoorDash had its IPO in December 2020 and has a market capitalisation of $47bn and, like all its competitors (e.g. Uber Eats, Just Eat), it’s yet to turn a profit (but, stretching its legs in Australia this month opening up a grocery retail delivery platform for IGA stores, focussing particularly on delivering last minute items that were forgotten in the main shop).
- Chowbotics will operate independently with DoorDash and will help restaurant clients expand their offerings. It’s compatible, too, with restaurant customers’ ghost kitchen models. The company was founded in 2014 with fresh food robot Sally the star! It can create custom salads, grain and poké bowls, parfaits, cereals and snacks all within a small space. The robot salad vendor is popular in universities, hospitals and grocery stores.
- Vending machines are clearly moving on from just delivering a chocolate bar, bag of chips and a can of Coke. In Singapore, machines are popping up that can dispense $30 premium chili crab meals for 2, wagyu beef, sashimi salmon and salmon steaks. Check out busy shopping areas in Japan to see vending machine technology at a higher level.
In food service and food retail, the labour component can both make you and break you! You can see polarisation in the market: high service, high touch, high cost for artisanal eating/food occasions; automation and no humans in sight for Grab & Go! Here’s 3 recent examples of the latter:
- From Latvia, RoboEatz creates both hot and cold food producing a meal every 30 seconds only requiring a human to refill the ingredient hopper. This “Robo-Chef” is about to be trialled on home territory and in the USA this quarter – providing contactless cooking and pick up. The RoboEatz Ark 03 is a 18sq.m. standalone kiosk featuring an articulating arm, 110 fresh ingredients, an induction cooker and storage points for pickup (see video). Online grocer Ocado from the UK sees merit in a “Robo-Chef” and has invested in Karakuri, a RoboEatz competitor;
- Less fancy, but unusual in selling fresh prepared salads and in a fast food chain, is Farmer’s Fridge (which has Danone as an investment partner), linking with doughnut titan Dunkin’. It’s an intriguing partnership – balancing naughty indulgent fried snacks with guilt-free fresh vegetable contributions to the customer’s 5-a-Day! It moves food vending machines on from confectionery and salty snacks to healthier fare.
We’ve come a long way in a short time from when a “takeaway” meant nipping down to the restaurant on the corner and picking up a pizza or having a boy on a scooter deliver it. For the delivery platforms, the principles are basically the same but their access to and use of customer information is at a stratospheric level. It’s the use of this information which drives their astonishingly high market values. The short term challenge for these platforms, especially delivery, is to expand customer numbers without leaking money at an unsustainable rate! 19th Century American philosopher Ralph Waldo Emerson famously said “Build a better mousetrap and the world will beat a path to your door”! For 21st Century consumers, Waldo’s pithy saying is half right . Nowadays, you’ve got to build a better mousetrap and beat a path to your customer’s door!