Food Delivery Giants Competition Through M&A

Syamkp
Syamkp
Jul 8, 2020 · 3 min read

The food delivery industry is set to benefit largely from the COVID-19 pandemic. The pandemic has boosted sales of food delivery companies, with restaurants shuttered, more people staying home and ordering takeout food. Many food delivery companies which are in a boom, now faces further competition as lockdown demand eases. As a result, the food delivery sector is undergoing a major consolidation right now, and more are expected. Recently Uber (NYSE: UBER) finally got its food delivery company, acquired its competitor Postmates after the company lost out in a bid for Grubhub last month. Meanwhile, Grubhub (NYSE: GRUB) was purchased by Amsterdam-based Just Eat Takeaway (AMS: TKWY) last month and this merger creates the largest food delivery business in the world outside China.

Postmates agreed to be acquired by Uber in a $2.65 billion, all-stock deal, the two companies announced on Monday. The company spent nearly 5% of its worth to buy Postmates and the ride-hailing giant can improve its market share to 37%, from its current position of 29%. The company reported, the demand for rides by far Uber’s biggest business plunged 75% in the second quarter from a year ago. Meantime, the orders for its Uber Eats food delivery service doubled during the same period.

“Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery — they can be a hugely important part of local commerce and communities, all the more important during crises like COVID-19,” Uber CEO Dara Khosrowshahi said in a statement.

Postmates founded in 2011, the company was one of the first to let customers in the US order meal delivery using a smartphone app. Currently, the Postmates platform operates in all 50 states and offers customers access to the most selection of merchants in the US with more than 600,000 restaurants. Postmates’ app will continue to run separately after the acquisition, but it’ll be able to tap into a merchant and delivery network combined with Uber Eats.

“Uber and Postmates have been strong allies working together to advocate and create the best practices across our industry, especially for our couriers,” Postmates co-founder and CEO Bastian Lehmann said.

On June 10 Amsterdam-based Just Eat Takeaway.com announced that it was acquiring Chicago-based Grubhub. The deal is expected to close in the first quarter of 2021, with the combined company to be headquartered in Amsterdam, and its US headquarters in Chicago. GrubHub is currently the number the three-meal service provider in the United States. It serves more than 1,600 cities there. Just Eat Takeaway.com, which was founded in 2000, is an Amsterdam-based company that does business with over 155,000 connected restaurants.

“Matt and I are the two remaining food-delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents,” Jitse Groen, CEO and founder of Just Eat Takeaway.com, said in a statement.

This merger will create the largest online food delivery outlet outside of China, according to the companies, and will focus on the US, UK, Germany, and the Netherlands. Grubhub processed 180 million orders for 23 million customers last year. While Just Eat Takeaway processed 413 million orders for 48 million customers.

“When you have mergers and acquisitions that improve the quality of your product, the ability to grow and bring better efficiency, it’s good for all” — Roger Agnelli.

The Startup

Get smarter at building your thing. Join The Startup’s +792K followers.

By The Startup

Get smarter at building your thing. Subscribe to receive The Startup's top 10 most read stories — delivered straight into your inbox, once a week. Take a look.

By signing up, you will create a Medium account if you don’t already have one. Review our Privacy Policy for more information about our privacy practices.

Check your inbox
Medium sent you an email at to complete your subscription.

Syamkp

Written by

Syamkp

A financial investment professional with over 9 years of FX and capital market industry. Chief analyst at Gulf Brokers https://gulfbrokers.com/en/research/blog

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +792K followers.

Syamkp

Written by

Syamkp

A financial investment professional with over 9 years of FX and capital market industry. Chief analyst at Gulf Brokers https://gulfbrokers.com/en/research/blog

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +792K followers.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store