Food On Demand’s Post

Delivery Hero, the Berlin-based food delivery company, through a public statement on Sunday (July 7) issued a warning to its investors about a potential antitrust fine of up to €400 million. This follows unannounced raids by European Union authorities on Delivery Hero and its Spanish subsidiary, Glovo, in July 2022 and November 2023. While the companies were not named initially, both confirmed that inspections had taken place. The European Commission is investigating potential competition law violations, including the formation of cartels and other restrictive business practices. Key Points: - Potential Fine: Delivery Hero may face a fine of up to €400 million due to an alleged anti-competitive agreement, including sharing national markets, exchanging commercially sensitive information, and establishing no-poach agreements. - Previous Provision: In its annual report last year, Delivery Hero had already set aside €186 million in anticipation of potential consequences from the EU inspections. The increased provision is based on recent discussions with the European Commission. - Acquisition of Glovo: Delivery Hero acquired a majority stake in Glovo at the end of 2021. The food delivery industry has seen rapid consolidation, with companies vying for market leadership to enhance economic viability. However, the sector has faced challenges due to thin margins, leading to market exits and business closures post-pandemic. Impact: - The potential antitrust fine highlights the significant regulatory risks in the food delivery industry. - Companies must navigate the complex regulatory landscape to ensure compliance and avoid hefty fines. - The outcome of this investigation could set a precedent for future regulatory actions in the sector. As the food delivery industry continues to evolve, it remains essential for companies to adhere to competition laws to achieve sustainable growth and success. Delivery Hero's proactive approach in cooperating with the European Commission demonstrates a commitment to resolving any issues and maintaining market integrity. Stay updated on key regulatory changes by following Global Regulatory Insights! #GRI #RegulatoryUpdates #Compliance #LegalIntelligence

More than 400 million euros: Delivery Hero faces higher EU fine Delivery Hero is grappling with a significantly higher fine from the European Union (EU) than initially anticipated due to alleged anti-competitive behavior. The food delivery giant announced on Sunday that the fine could exceed 400 million euros, far more than the 186 million euros provisioned earlier. This revelation led to a sharp decline in Delivery Hero’s shares, marking one of the steepest drops in the company's history on Monday morning. The reassessment of the potential fine stemmed from a recent informal exchange with the EU Commission and subsequent analysis. Delivery Hero emphasized its commitment to fully cooperating with the authorities. The company has been under EU antitrust scrutiny for alleged market-sharing practices, non-poaching agreements, and the exchange of commercially sensitive data. This has led to multiple searches of Delivery Hero and its Spanish subsidiary Glovo’s business premises since 2022. Analyst Giles Thorne from Jefferies highlighted that the ongoing antitrust proceedings represent another regulatory setback linked to Delivery Hero’s acquisition of Glovo. Glovo has faced multiple fines in Spain for employment law violations, costing millions. In response to the looming larger fine, Delivery Hero’s shares plummeted by over 17% on Monday, hitting 17.35 euros, their lowest in six months. Thorne noted that investor concerns are less about the fine's size or the company's financial capacity to pay it and more about the behavioral patterns revealed by these investigations. As Delivery Hero navigates these regulatory challenges, the situation underscores the importance of compliance and the potential repercussions of anti-competitive practices in the highly competitive food delivery industry. Stay ahead with the latest in food delivery news from the weekly Boolanga Bites newsletter, brought to you by Boolanga Business. Sign up for our LinkedIn newsletter now to receive weekly updates directly to your inbox every Monday.

𝗗𝗲𝗹𝗶𝘃𝗲𝗿𝘆 𝗛𝗲𝗿𝗼 𝗙𝗮𝗰𝗲𝘀 𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 €𝟰𝟬𝟬𝗠 𝗔𝗻𝘁𝗶𝘁𝗿𝘂𝘀𝘁 𝗙𝗶𝗻𝗲 Food delivery giant Delivery Hero faces a potential €400 million fine from the European Union (EU) for allegedly engaging in anti-competitive agreements, including sharing national markets, exchanging commercially sensitive information and agreeing not to poach each other's employees. This development follows unannounced inspections by EU authorities at the offices of Delivery Hero and its Spanish subsidiary Glovo. These inspections stemmed from concerns raised by the Spanish Ministry of Labor in September 2022, regarding Glovo's hiring practices. EU antitrust regulators then expanded their investigation into hiring practices and information sharing, leading to the raids at both companies' headquarters. While the EU did not name the companies at the time, both Delivery Hero and Glovo confirmed that the inspections had taken place. The European Commission raised concerns about potential breaches of competition law, in particular the formation of cartels and other restrictive business practices. Delivery Hero has committed to cooperate with the Commission's investigation, as it did during previous unannounced inspections in July 2022 and November 2023. In addition, the company will significantly increase its provision for potential fines, which previously stood at €186 million. The news of the potential fine also caused Delivery Hero's shares to fall as much as 17.4% in early trading on Monday. Sources: Delivery Hero, Reuters

Shares in Delivery Hero fell more than a tenth after the German online food delivery group revealed it faces a potential fine from the EU for anti-competition violations, as the bloc steps up its scrutiny on corporate practices. The stock declined by as much as 17 per cent, before paring losses to 5 per cent by mid-morning, on the first trading session in Frankfurt since the company said it might face a penalty from the EU of more than €400mn. The potential fine for “alleged anti-competitive agreement to share national markets, exchanges of commercially sensitive information and no-poach agreements” prompted a plan to “significantly increase” a previous €186mn provision, Delivery Hero said in a statement on Sunday. https://lnkd.in/ew7jqEG4

Last month, US-based DoorDash showed interest in acquiring British meal delivery giant Deliveroo according to Reuters sources 🍽 Despite initial talks, the deal stalled over valuation disagreements. ▶ Why is this significant? Deliveroo's shares have dipped 68% since August 2021, reflecting the pandemic's impact on online food delivery demand and investor focus on profitability. Yet, the company reported a 2% growth in orders in Q1 2024, with notable performance in France, UAE, and Hong Kong. ▶ Key Players: Amazon is Deliveroo's largest shareholder with a 13.23% stake DoorDash, valued at $46.57bn, seeks global diversification, as evidenced by its $8bn acquisition of Finnish rival Wolt in 2021. Analysts at Jefferies said this “may only be the start” and could open the door to more takeover interest in Deliveroo. Deliveroo shares rose as much as 6% at the open, before paring to about 3%. #Deliveroo #DoorDash #MergersandAcquisitions #Food #Deals

𝗗𝗲𝗹𝗶𝘃𝗲𝗿𝘆 𝗛𝗲𝗿𝗼 𝗦𝗲𝗹𝗹𝘀 𝗗𝗲𝗹𝗶𝘃𝗲𝗿𝗼𝗼 𝗦𝘁𝗮𝗸𝗲 𝗳𝗼𝗿 £𝟴𝟮𝗠 In a big move, Delivery Hero has divested its stake in Deliveroo, marking a decisive step in its capital allocation strategy. The Berlin-based food delivery giant said it had sold around 68 million shares at £1.13 each, culminating in a deal worth approximately £82 million. This transaction not only demonstrates Delivery Hero's focus on disciplined financial management but also highlights the evolving dynamics within the food delivery sector, as companies navigate through consolidation and market adjustments post-pandemic. 𝗠𝗮𝗿𝗸𝗲𝘁 𝗠𝗼𝘃𝗲𝗺𝗲𝗻𝘁𝘀 𝗮𝗻𝗱 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 The sale represents 4.5% of Deliveroo's total shares, with expectations for the deal to settle early February. This divestiture follows Delivery Hero's 2021 investment in Deliveroo, signaling a recalibration of its investment portfolio amid the industry's shifting landscape. The broader context includes Delivery Hero's operational restructuring and the food delivery market's response to challenging economic conditions, underscoring the importance of strategic flexibility in today's unpredictable environment. 𝗔 𝗚𝗹𝗶𝗺𝗽𝘀𝗲 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗙𝘂𝘁𝘂𝗿𝗲 As the food delivery industry consolidates, Delivery Hero's recent action may signal upcoming strategic shifts, prompting stakeholders and market observers to closely monitor its impact on competitive dynamics and operational strategies in the sector. Sources: Tech EU

Already Struggling With Low Profit Margins, Delivery Hero Is Going To Lose $433M USD In Fines Everyone knows the meal delivery business is hard. It's a high cost low margin business that has seen billions of dollars go up in smoke trying to make work. To make it work, you HAVE to be # 1 or # 2 in the market. Anyone else and you'll bleed. This is why there has been so much consolidation in the space. News this morning is that the EU is going to fine Delivery Hero for anti-trust violations related to activity with its subsidiary Glovo. Here's the EU's position: Investigating Delivery Hero and Glovo for engaging in anti-competitive practices, including market sharing and no-poach agreements The news of the fine comes after not 1, but 2 raids conducted by the EU over the last couple of years (July 22, November 2023). Delivery Hero's stock dropped over 17% as they told investors about the news, and the €186M it has already set aside to deal with it. Having an operating model that only works when you dominate the market doesn't work. There is too much competition and volatility with direct delivery. Restaurants and brands using these services should be thinking of two things. First, what happens if you partner is not dominating the market? And second, knowing that they are usually only profitable when they have a massive share, does it leave you with enough control over the delivery experience and what risks could you face when there is only one service provider in this rapid delivery space when it comes to your costs?

The Food Delivery Landscape is Changing. Fast. Delivery Hero to sell a 4.5% stake in Deliveroo. This is what we know: -> Post-pandemic demand for food delivery is changing. -> Deliveroo shares increased 30% in value last year. -> Investors are putting pressure to make money. Deliveroo founder Will Shu dual-class shares are to expire in April this year, which grants him voting powers to block a hostile takeover. What is next? IMO, potential consolidation and M&A. Doordash is scanning potential opportunities. Watch this space. PS Whether you are an operator or a customer, does the current delivery model work for you? ——————————————— I’m Edin. In real life, I am an entrepreneur like you. With the experience of starting and exiting my businesses. I help food & bev founders grow businesses AND personal brand on LinkedIn. DM me to get the ball rolling.

Interesting read with your morning coffee ☕️ These platforms plan to refrain from prompting tips in the NYC area until deliveries are successfully completed, eliminating the need for customers to post tips as an incentive for faster service. Company policies can impact a company's brand. Will this tipping policy change change the negative feelings created by requiring a tip before delivery, in all effect, bidding for a faster delivery... thoughts? DoorDash Uber #ubereats #doordash #fooddelivery #tipping

Leading online food delivery groups in Europe and the US have racked up more than $20bn in combined operating losses since they went public, after a fierce battle for market share. Shares in Deliveroo, Just Eat Takeaway.com , Delivery Hero and DoorDash — the four largest standalone, publicly listed food-delivery businesses in the US and Europe — are all trading well below their pandemic-era peaks, as investors scrutinise their business models. Following a period of pandemic lockdown-fuelled growth, the four companies are now contending with a tougher macroeconomic environment that has hit consumers.