Yet more regional consolidation is underway in the world of take-out and delivery startups in Europe. Today, Berlin-based Delivery Hero announced that it is selling its UK business, which operates as hungryhouse, to rival Just Eat for £200 million ($251 million) in cash, plus another £40 million ($50 million) on top of that based on hungryhouse’s performance between now and the date of the deal closing. The deal still needs to get approved by the UK’s competition regulator.
The deal comes just five days after Delivery Hero — which was last valued at just over $3 billion — announced that it would acquire Foodpanda, another global rival, from Rocket Internet for an undisclosed amount of money. It seems now that the deal in part is to help finance the other transaction. The Foodpanda acquisition strengthens Delivery Hero’s operations in Europe, South America and Asia.
The UK market has been a particularly crowded one for food delivery and take out startups. In addition to Just Eat and Delivery Hero, there are newer entrants like Uber Eats and Deliveroo. The latter two focus on a smaller and higher end selection of restaurants and have as such been eating into the margins and market share of older players, who have taken more of a catch-all approach to the business of takeaway.
That, incidentally, has also been the strategic approach for many of these earlier businesses also when it came to expansion: scale as fast and as globally as you can to improve margins by dominating in all markets. In the case of the UK, Delivery Hero first entered the country when it acquired hungryhouse in 2011, with the business first getting its start in 2006.
But the bigger strategy, however, appears to have changed as Delivery Hero and others look to sell off assets in certain regions to help build up their presence in others.
“The sale of hungryhouse to Just Eat rationalizes our global footprint, and we remain focused on operating market-leading brands, globally. Proceeds from this sale will allow us to pursue further global growth opportunities, as we have consistently and successfully done in recent years. We also want to thank the entire hungryhouse team – this transaction reflects their amazing achievements within the Delivery Hero Group since 2011.”
That’s not to say that Delivery Hero is winding down much or getting any less global in the wider sense — not for now, at least. It says that its wider footprint covers 17 million active users and 271,000 restaurants in 27 countries in Europe, the Middle East, Latin America and the Asia-Pacific region. In addition to take out ordering, Delivery Hero also offers premium food ordering and delivery in 51 cities across 10 countries.