Amazon Deal Makes Meal Delivery Even Hotter

Tech giant’s investment in London-based meal-delivery startup Deliveroo is the second slug of cash to hit the sector this month

By Stephen Wilmot


News of a $575 million funding round in Deliveroo, led by Amazon.com, led many investors to think twice about investing in other fledgling food-delivery services. Photo: Frank Augstein/Associated Press


Takeout stocks plunged on Friday after Amazon announced an investment in a fast-growing meal-delivery startup. But investors may need to look elsewhere for the real victims of all the cash flowing into a sector that epitomizes the promise and profligacy of Silicon Valley.

Deliveroo, founded by two Americans in London in 2013, announced on Friday a $575 million funding round led by Amazon. Shares in Just Eat, a pioneering U.K. website for ordering takeout food that now competes with Deliveroo, fell almost 10%. Shares in Delivery Hero DHER -2.26%▲ and Takeaway.com , TKWY -4.58%▲ which offer similar services to Deliveroo in other markets, also cratered.


The Amazon investment marks the second time this month the sector has gained a slug of cash.

One of Deliveroo’s biggest rivals is Uber Eats, whose parent Uber raised $8.1 billion in its initial public offering last week.

Whether these two players use their riches to eat each others’ lunches, or those of other couriers, is hard to predict in a fast-moving industry. Eventually, the market is likely to be reordered by deals. Uber Eats tried to take over Deliveroo last year but couldn’t agree on valuation.

The mergers that do occur in this industry benefit shareholders a lot: When Takeaway.com and Delivery Hero agreed to combine their German businesses last December, the shares jumped 28% and 10% respectively. That is the risk for those looking to bet against players like Just Eat, which still has a strong market position in the U.K.

That said, mergers are less likely while the money to compete is flowing so freely. Instead, the cash will likely subsidize further rapid growth. Delivering restaurant meals to homes spares consumers the chore of cooking even if they want to eat in. This sector is as hot in the U.S.—where Grubhub ,DoorDash and even Amazon Prime Now compete with Uber Eats—as it is in Europe and elsewhere.

The real losers of this trend could be the retailers that sell groceries. Food that would once have been bought in stores and cooked by consumers is being bought and cooked by restaurants.

The growth of meal delivery has the capacity to transform much more than the traditional takeout industry.

0 comentarios:

Publicar un comentario