Online meal delivery firms knocked off course by
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[April 07, 2020] By
Anna Rzhevkina, Hilary Russ and Toby Sterling
GDYNIA/NEW YORK/AMSTERDAM (Reuters) - The
lockdown of millions of people at home across the globe due to the
coronavirus should have been the perfect recipe for success for the
burgeoning online meal delivery market.
But some of the world's largest players, including Uber Eats and Just
Eat, which is being bought by Takeaway.com, have been hit by a double
whammy: restaurant suppliers have been ordered to shut and with more
time at home to cook for themselves, some people appear to have lost
their appetite for takeaway.
While many restaurants have switched to offering takeaway, giving the
online services a bump in members signing up, some of the world's
biggest food chains using the apps, such as McDonald's <MCD.N> and
Wagamama, have closed for the time being.
Data from SimilarWeb, which tracks downloads and use of smartphone apps
and websites across key European markets, highlights the scale of the
slowdown across Europe as the pandemic spread and governments ordered
people to stay at home.
In France, Spain and the United Kingdom, Just Eat and Uber Eats saw
drops in average daily users ranging from 2% to as much as 23% in March,
compared with the averages for January and February. Deliveroo also saw
falls in France and Spain, although a small increase in the United
Kingdom, the data shows.
The falls reflect a big drop in repeat customers. Some 90% of activity
on apps is reorders, according to SimilarWeb.
The data is in stark contrast to the double-digit percentage increases
in grocery delivery volumes over the same period as people rushed to
stock up as they went into lockdown.
The numbers offer a glimpse into how the virus has quickly changed
people's food ordering and cooking habits and has put the brakes on a
Before the virus, the European industry, worth about $16.5 billion in
revenue, was expected to grow by 10% per year over the next decade,
according to Statistica.
Just Eat and Deliveroo declined to comment on the data. An Uber
spokesman said the impact of the virus had varied widely across Europe,
but it had seen big increases in restaurants and shops signing up to its
ASIA AND AMERICA
In other parts of the world, the picture is less clear.
Takeaway.com <TKWY.AS> has seen early signs in Asia of a pick-up in
demand after a slowdown in the early stages of lockdowns there.
"Asia entered lockdown first and signs of recovery are taking place
there first," said a spokesman.
Giving the first insight into the impact in China, the original
epicentre of the outbreak with the first lockdowns, Chinese food
delivery service Meituan Dianping <3690.HK> said last week it expected
to report a first-quarter loss after a drop in orders.
In the United States, Grubhub <GRUB.N> said demand for takeout appeared
to be recovering in some parts of the country, but it was a different
picture in places including New York, where a bustling restaurant scene
has battened down the hatches as restrictions kick in.
[to top of second column]
Bikers of food courier service Deliveroo demonstrate as they called
on clients to boycott the brand in Paris, France, August 7, 2019.
"New York is not doing well because residents have fled, restaurants are closing
and people are scared," Grubhub CEO Matt Maloney said in an interview.
"In Seattle, people feel like the worst is over, they're feeling a little bit
more confident," he said. "Everyone else is a mixed bag in between those two."
Uber Eats, Grubhub, Delivery Hero <DHER.DE> and Just Eat Takeaway - whose merger
is awaiting UK regulatory approval - have offered incentives to restaurants,
including cutting commission or delivery fees and signing up new members more
quickly, to improve their cashflow and help them through the crisis.
That should provide a boost to their own membership numbers in the long run once
orders improve. Grubhub signed up more than 20,000 new restaurants in March, far
exceeding its previous monthly record of 5,000, said Maloney. Deliveroo got
3,000 new UK restaurants on board last month, a spokesperson said.
The loss of business has prompted some to branch into new markets. Delivery Hero
is expanding into supplying groceries to customers stuck at home and Uber Eats
has broadened its grocery offering by teaming up with supermarkets like
Uber Eat's grocery and convenience store sales have more than doubled in some
European cities, the Uber spokesman said.
Delivery Hero is offering its grocery service for free and is trying to make it
pay by selling high-margin consumer products, CEO Niklas Ostberg told Reuters.
He said it was also offering a personal shopper service in Saudi Arabia and some
Latin American countries, where a delivery person goes shopping for a customer.
Deutsche Bank analysts reckon such moves may only partially offset the drop in
takeaway orders, which they expect will hurt 2020 commission fees and dent
growth in the first half.
"Whilst the COVID-19 outbreak could intuitively be seen as beneficial to online
food delivery players, with millions of people under lockdown, we conclude that
this is not the case," they said in a research note this week.
They cut their 2020 core earnings (EBITDA) forecast for Just Eat Takeaway by
over 40% and their revenue estimate by 10%, while reducing EBITDA and revenue
forecasts for Delivery Hero by 17% and 9% respectively.
The worry is that even when restrictions ease and restaurants start reopening,
business may not pick up as quickly as hoped. Belt tightening due to job losses
may also stymie households' spending power. Some restaurants won't survive.
In Grubhub's hardest-hit markets, restaurant closures have reached as high as
30%, affecting mostly independent outlets which don't have cash on hand, said
Maloney, the company's CEO.
"It's hard to imagine them reopening without some significant government funded
stimulus," he said.
(Additional reporting by Emma Thomasson in BERLIN and Paul Sandle in LONDON;
Writing by Jospehine Mason; Editing by Keith Weir and Mark Potter)
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