# European food delivery shapes up with Getir’s Gorillas buy Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-12 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Getir's $1.2 Billion Deal to Buy Gorillas: Meta Description: Getir's acquisition of Gorillas signals a shift in the food delivery sector amidst post-COVID challenges. Mergers, cost-cutting, and growth strategies are URL: https://financedigest.com/european-food-delivery-shapes-up-with-getirs-gorillas-buyhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-12-11t163149z1lynxmpeiba065rtroptp4europe-food-delivery-1736814739365-compressed.jpg) By Toby Sterling AMSTERDAM (Reuters) -Grocery-in-minutes company Getir’s $1.2 billion deal to buy rival Gorillas is an important step toward consolidation in Europe’s food delivery market, where companies are struggling amid a post-COVID slowdown. After rapid expansion, these businesses were hit in March with a fall in lockdown-driven demand for deliveries and by rising interest rates, while investors soured on loss-making tech companies. The food delivery groups began quickly combining, [cutting costs](https://www.financedigest.com/cutting-business-costs-pros-of-using-commercial-heat-pumps-in-2016.html "Cutting business costs: Pros of using commercial heat pumps in 2016"), and exiting markets where they were weak, in a quest to become profitable. Companies and industry observers [say the painful retrenchment is set](https://www.financedigest.com/britain-sets-5g-goal-says-no-magic-number-of-operators.html "Britain sets 5G goal, says no ‘magic number’ of operators") to continue — but survivors are starting to see the first green shoots. Citi analyst Catherine O’Neill said mergers and cost-cutting to remove excess capacity were taking [place more quickly than expected](https://www.financedigest.com/revealed-the-top-5-places-brits-expect-to-find-the-one-in-2016.html "REVEALED: THE TOP 5 PLACES BRITS EXPECT TO FIND ‘THE ONE’ IN 2016") and unit economics, including order size per delivery, are improving. But she said [Europe’s cost-of-living squeeze](https://www.financedigest.com/power-squeeze-curbs-chinese-growth-leaves-europe-in-a-gas-bind.html "Power squeeze curbs Chinese growth, leaves Europe in a gas bind") remains a major negative. We haven’t [seen how these companies will get through a recession](https://www.financedigest.com/wall-street-seen-opening-higher-but-u-s-recession-priced-in.html "Wall Street seen opening higher but U.S. recession priced in") yet. Istanbul-based Getir and Berlin-based Gorillas were among the many venture capital-backed quick commerce companies racing during the pandemic to set up “dark stores” — delivery hubs in [city centres](https://www.financedigest.com/buyers-shun-city-centres-for-country-villas-when-it-comes-to-lifestyle-investment-in-iberia.html "BUYERS SHUN CITY CENTRES FOR COUNTRY VILLAS WHEN IT COMES TO LIFESTYLE INVESTMENT IN IBERIA") used to shuttle groceries swiftly to customers. The dark store model is fundamentally different to that of more established groups like Just Eat [Takeaway](https://www.financedigest.com/just-eat-takeaway-raises-2023-guidance-launches-buyback.html "Just Eat Takeaway raises 2023 guidance, launches buyback") and Uber Eats, which take orders for restaurants and deliver meals, though they are often seen as competitors. QUICK COMMERCE The Gorillas acquisition makes Getir [Europe’s largest](https://www.financedigest.com/uk-card-fraud-losses-climbed-18-percent-in-2015-largest-rise-in-europe.html "UK CARD FRAUD LOSSES CLIMBED 18 PERCENT IN 2015, LARGEST RISE IN EUROPE") quick commerce company. Getir was valued at around $8.8 [billion in Friday’s deal](https://www.financedigest.com/australias-macquarie-explores-6-billion-deal-for-britains-mg-sky-news-reports.html "Australia’s Macquarie explores billion deal for Britain’s M&G, Sky News reports"), about seven times more than Gorillas due to its strong position in Turkey where it is based, analysts said. Gorillas and Getir did not respond to requests for comment. Other consolidators are Berlin-based Flink and Philadelphia-based GoPuff, which [operates in the United States](https://www.financedigest.com/uk-brings-train-operator-transpennine-under-temporary-state-control.html "UK brings train operator TransPennine under temporary state control") and Europe. “In Germany, we see competition directly from Gorillas and Getir. All the others have disappeared,” said Flink spokesman Boris Radke. Flink [operates 190 dark stores](https://www.financedigest.com/kfc-franchisees-in-russia-ask-govt-to-halt-sale-of-stores-to-local-operator-ria.html "KFC franchisees in Russia ask govt to halt sale of stores to local operator – RIA"), compared with 180 for Gorillas. Radke said Flink is thriving due to close [partnerships with supermarkets REWE in Germany and Carrefour in France](https://www.financedigest.com/france-next-on-the-map-for-adtech-vendor-adnami-following-the-signing-of-new-partnerships-with-ad4good-and-tf1.html "France next on the map for adtech vendor Adnami following the signing of new partnerships with Ad4Good and TF1"), both of which are shareholders in the company. Analysts reckon that a dark [store hub turns profitable](https://www.financedigest.com/ikea-stores-owner-ingkas-annual-operating-profit-rises-9.html "IKEA stores owner Ingka’s annual operating profit rises 9%") at somewhere between 500-1,000 orders per day. We closed down a few [hubs that were not profitable and we definitely put aside any kind of bigger expansion plans,”](https://www.financedigest.com/li-cycle-and-glencore-unveil-plans-for-recycling-hub-in-italy.html "Li-Cycle and Glencore unveil plans for recycling hub in Italy") amid the downturn, Radke said. However the number of Flink hubs that are profitable is growing he said, and [sales are rising](https://www.financedigest.com/uks-wetherspoon-posts-13-1-rise-in-sales-for-25-wk-period.html "UK’s Wetherspoon posts 13.1% rise in sales for 25-wk period") “consistently month after month. LESS CAPITAL, FEWER COUPONS More than a dozen smaller European quick commerce [companies failed](https://www.financedigest.com/uk-to-fine-tech-companies-that-fail-to-remove-self-harm-material.html "UK to fine tech companies that fail to remove self-harm material") or were acquired since mid-2021. Venture capital firms [invested $125 million](https://www.financedigest.com/sse-to-invest-122-million-in-scottish-pumped-hydro-project.html "SSE to invest 2 million in Scottish pumped hydro project") in the sector in two deals in 2022, down from $1.3 billion in thirteen deals in 2021, based on PitchBook data. With less competition and less new capital entering the market, remaining firms in both grocery and food [delivery have cut](https://www.financedigest.com/tesla-posts-record-quarterly-deliveries-after-price-cuts-up-4-from-q4.html "Tesla posts record quarterly deliveries after price cuts, up 4% from Q4") spending on vouchers and promotions. While most meals companies have experimented with quick commerce, both types of firms are also now cooperating more frequently, a sign of things to come. [Last month](https://www.financedigest.com/fintech-trends-to-look-out-for-during-the-last-six-months-of-2019.html "Fintech trends to look out for during the last six months of 2019"), Getir struck a deal with Just Eat Takeaway to list Getir’s groceries on the Takeaway app. That will give Just Eat Takeaway additional high-margin orders, while Getir gets more deliveries and [sales from its dark stores](https://www.financedigest.com/ikea-stores-owner-ingka-says-campaigns-help-boost-store-visits-and-sales.html "IKEA stores owner Ingka says campaigns help boost store visits and sales"). I expect we will see more activity either in the form of M&A or deep commercial partnerships,” said Larry Illg, head of food businesses at technology investor Prosus, which owns a stake in [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"). While profits may still be distant for the privately-held quick commerce companies, Europe’s [listed meal delivery companies have all set](https://www.financedigest.com/oneweb-eutelsat-set-for-secondary-london-listing-the-times.html "OneWeb-Eutelsat set for secondary London listing – The Times") formal targets for earnings before interest, taxes, depreciation and amortisation (EBITDA). Just Eat has said it is EBITDA-profitable already. Delivery Hero [says it will get there in 2023 and Britain’s Deliveroo by the first half](https://www.financedigest.com/over-half-of-britons-say-loyalty-cards-encourage-them-to-buy-a-product-niq.html "Over half of Britons say loyalty cards encourage them to buy a product – NIQ") of 2024 at the latest. [Shares in the European](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") delivery companies are down around 60% from a year ago, but have traded sideways since June. Uber and DoorDash, both already EBITDA positive on the strength of their U.S. operations, say their [European subsidiaries are growing](https://www.financedigest.com/german-economy-expected-to-grow-modestly-in-2023-european-commission.html "German economy expected to grow modestly in 2023 – European Commission"). We continue to [see strong demand for grocery and we continue to see grocery being a growth driver for our overall business next year,”](https://www.financedigest.com/inpost-sees-better-margin-in-poland-plans-no-job-cuts-this-year.html "InPost sees better margin in Poland, plans no job cuts this year") Uber spokesman Caspar Nixon said. He said fast grocery options are “absolutely available on the app, but we don’t believe it makes sense to own the entire [supply chain”](https://www.financedigest.com/how-to-bring-immediacy-back-to-the-supply-chain-with-faster-payments.html "How to Bring Immediacy Back to the Supply Chain With Faster Payments") as Getir does. Sajal Srivastava, co-founder at TriplePoint Capital, which has provided venture debt funding for Flink, [says negativity](https://www.financedigest.com/analysis-europe-says-goodbye-to-negative-rates-or-just-au-revoir.html "Analysis-Europe says goodbye to negative rates – or just ‘au revoir’?") about quick commerce has been overdone. “Consumers are still using it. Numbers are still growing and the economics are improving,” he said. So to “all the naysayers saying ‘quick commerce is over – No. It’s going to be around and the data shows it.” (Reporting by Toby Sterling. Editing by Jane Merriman) --- This blog is powered by Superblog. 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