# Analysis-Eat or be eaten? Food delivery apps have knives out as pandemic boom fades Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-10-20 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Consolidation in Food Delivery Market Amid Changing Meta Description: As investor sentiment shifts in 2021 and industry players face financial challenges, the meal delivery market anticipates consolidation post-COVID-19 boom. URL: https://financedigest.com/analysis-eat-or-be-eaten-food-delivery-apps-have-knives-out-as-pandemic-boom-fadeshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-10-20t141801z5lynxmpeh9j0v3rtroptp4just-eat-takeaway-food-delivery-1736837538938-compressed.jpg) By Toby Sterling AMSTERDAM (Reuters) – The meal delivery market is expected turn to a phase of consolidation in the coming months as players look to adjust operations after the explosive boom in demand served up to them during the COVID-19 pandemic. The industry, which includes the likes of Uber Eats, Just Eat Takeaway and Deliveroo, generally saw share prices spike during 2020 as lockdowns and other restrictions kept people eating at home. [Investor sentiment has turned in 2021 in anticipation of a return](https://www.financedigest.com/certainty-in-an-uncertain-world-post-brexit-investors-turn-to-commercial-property-and-fixed-returns.html "Certainty in an uncertain world – post-Brexit investors turn to commercial property and fixed returns") to normal, but experts say consumers’ ordering habits have likely changed permanently. Food delivery [app usage has not slowed down, even as consumers return to in-person dining more frequently,” said Alisha Kapur of Similarweb, which analyses web traffic and app downloads](https://www.financedigest.com/40000-downloads-of-e-money-app-devere-vault-by-end-of-2017.html "40,000+ downloads of e-money app deVere Vault by end of 2017"). Yet most of the [companies are losing money and the increasing need](https://www.financedigest.com/italys-windfall-tax-on-energy-companies-needs-to-be-rewritten-pm.html "Italy’s windfall tax on energy companies needs to be rewritten – PM") for scale means the market is ripe for consolidation, according to industry experts. Kapur said it was “very rare” for significant numbers of consumers to change the meal delivery apps they’re accustomed to using, with “a few exceptions that demonstrate the largest [players are only grabbing more share”](https://www.financedigest.com/skull-deformity-implants-market-share-top-operating-players-recent-enhancements-and-regional-analysis-2028.html "Skull Deformity Implants Market Share, Top Operating Players, Recent Enhancements and Regional Analysis 2028"). Stock prices across the sector have stabilised after the pandemic-driven spike and many players have actually seen them fall this year, also hit by developments such as a 15% cap on commission fees they can [charge restaurants in New York](https://www.financedigest.com/trump-charges-bring-new-york-zombie-case-back-to-life.html "Trump charges bring New York ‘zombie case’ back to life") City, imposed in August. While Amazon-backed Deliveroo [raised its full-year guidance](https://www.financedigest.com/just-eat-takeaway-raises-2023-guidance-launches-buyback.html "Just Eat Takeaway raises 2023 guidance, launches buyback") on Wednesday, its shares are still trading well below its 390 pence March IPO price. DIGESTING GRUBHUB Just [Eat Takeaway](https://www.financedigest.com/just-eat-takeaway-faces-shareholder-backlash-over-dealmaking.html "Just Eat Takeaway faces shareholder backlash over dealmaking") has fared the worst, though. Its $7.3 billion acquisition of American rival GrubHub in June looked smart against the new industry landscape, but it has left the Dutch-based company heavily exposed to the New York cap, which it [says will cost it around 100 million](https://www.financedigest.com/mobile-games-developer-huuuge-says-has-24-2-million-at-svb.html "Mobile games developer Huuuge says has .2 million at SVB") euros ($116 million) in the second half of this year. Takeaway shares have sunk more than 20% this year prompting a major long-term shareholder, Cat Rock, to call on management to [sell assets](https://www.financedigest.com/uks-cineworld-to-not-sell-assets-individually-denies-talks-with-amc.html "UK’s Cineworld to not sell assets individually, denies talks with AMC") and explore strategic combinations. As a result, the company is at the centre of industry [deal talk](https://www.financedigest.com/sabadell-in-talks-with-worldline-nexi-and-fiserv-for-payments-deal-sources.html "Sabadell in talks with Worldline, Nexi and Fiserv for payments deal -sources"). Potential targets for acquisition, according to analysts, include Takeaway’s 33% stake in iFood of Brazil, [valued at more than $3 billion](https://www.financedigest.com/sulphur-recovery-technology-market-value-to-grow-by-almost-1-2-billion-during-2021-2031.html "Sulphur Recovery Technology Market Value to Grow by Almost .2 Billion During 2021-2031"), parts of its U.S. business, which requires [significant investment](https://www.financedigest.com/hermes-bolsters-sme-service-with-significant-investment.html "HERMES BOLSTERS SME SERVICE WITH SIGNIFICANT INVESTMENT"), and its French business, which trails Uber and Deliveroo in that market. Takeaway reported weaker than expected third-quarter orders last week, but [CEO Jitse Groen said it was seeing business improve in several countries as workers returned](https://www.financedigest.com/factbox-five-facts-about-returning-ubs-ceo-sergio-ermotti.html "Factbox-Five facts about returning UBS CEO Sergio Ermotti") to offices and the weather worsened heading into winter. Groen and other senior executives are due to [meet worried investors on Thursday to outline strategy](https://www.financedigest.com/new-zealand-pm-meets-biden-to-discuss-u-s-indo-pacific-strategy.html "New Zealand PM meets Biden to discuss U.S. Indo-Pacific strategy"). [“Investors are looking for a clear plan](https://www.financedigest.com/german-investor-kuehne-does-not-plan-to-further-boost-lufthansa-stake-faz.html "German investor Kuehne does not plan to further boost Lufthansa stake – FAZ") to improve in the U.S., a clear [plan to defend](https://www.financedigest.com/uks-sunak-under-fire-over-cost-of-living-defends-his-tax-cut-plans.html "UK’s Sunak, under fire over cost of living, defends his tax cut plans") market shares in Europe, and especially in Germany, said Clément Genelot, an analyst at Bryan Garnier & Co, who launched coverage of Takeaway with a well-timed “Sell” recommendation in May. And also a clear vision and a clear [plan to quickly roll](https://www.financedigest.com/should-i-roll-my-old-retirement-plans-into-a-roth.html "Should I Roll My Old Retirement Plans into a Roth?") out grocery delivery. Takeaway said it was confident it would address key investor concerns, including an update on “portfolio [management” and investment](https://www.financedigest.com/mg-appoints-former-head-of-axa-investment-managers-andrea-rossi-as-new-ceo.html "M&G appoints former head of AXA Investment Managers Andrea Rossi as new CEO") priorities, at the capital markets day. ‘LEANING INTO GROCERY’ Grocery delivery is proving another hot area for deals and [partnerships in the industry](https://www.financedigest.com/gumgum-announces-industry-first-contextual-partnership-with-tumblr.html "GumGum Announces Industry First Contextual Partnership with Tumblr"). Deliveroo has been most aggressive in working with grocery chains, with the support of 12% [shareholder Amazon](https://www.financedigest.com/amazon-faces-shareholder-vote-on-treatment-of-warehouse-workers.html "Amazon faces shareholder vote on treatment of warehouse workers"). Uber told Reuters its meal delivery business was also “very much leaning into grocery”, [pointing to a deal with Britain’s Sainsbury’s and France’s](https://www.financedigest.com/france-seeks-strategy-as-nuclear-waste-site-risks-saturation-point.html "France seeks strategy as nuclear waste site risks saturation point") Carrefour. Others are looking to take advantage on a blizzard of launches of “on [demand” grocery delivery](https://www.financedigest.com/dental-delivery-system-market-is-booming-worldwide-by-2027-growth-share-demand-and-analysis-forecasts.html "Dental Delivery System Market is Booming Worldwide by 2027 | Growth, Share, Demand and Analysis Forecasts") startups, especially in Europe. DoorDash has invested in Germany’s Flink. [Delivery Hero](https://www.financedigest.com/delivery-hero-ramps-up-interest-payments-to-raise-1-billion-euro-convertible-bond.html "Delivery Hero ramps up interest payments to raise 1 billion euro convertible bond"), one of Takeaway’s oldest competitors, said on Tuesday it has taken an 8% stake in another German startup, Gorillas. Delivery Hero, a prolific investor, owns 7.4% of Takeaway and a 5.03% stake in Deliveroo. It also owns 37% of Glovo, and the pair sold each other operations in the Balkans and in [Latin America](https://www.financedigest.com/latin-america-automotive-hvac-market-size-share-growth-trends-and-forecast-analysis-to-2020.html "Latin America Automotive HVAC Market Size, Share, Growth Trends, and Forecast Analysis to 2020") during the pandemic. Technology investor Prosus in turn owns 27.42% of Delivery Hero and a [majority stake](https://www.financedigest.com/deutsche-telekom-reaches-majority-stake-in-t-mobile-u-s-ceo.html "Deutsche Telekom reaches majority stake in T-Mobile U.S. – CEO") in Brazil’s iFood, setting the Prosus-Delivery Hero pair up as possible deal brokers. ($1 = 0.8604 euros) (Reporting by Toby Sterling; Additional reporting by Anna Rzhevkina, Zuzanna Szymanska, Paul Sandle; Editing by Pravin Char) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---