Retreating food delivery companies are counting on survival in their home markets.
After a multi-year rise and a surge in demand triggered by the pandemic in 2020 and 2021, this year has been tough for many food delivery platforms.
It all started when Germany’s Delivery Hero lost more than 30% of its stock market valuation in February on poor forecasts for 2022.
Over the next several months, Delivery Hero and its peers continued to decline, reflecting broader market conditions and lower consumer spending.
Amsterdam-based Just Eat Takeaway.com kicked off a wave of withdrawals this summer when it exited the Romanian and Portuguese markets.
Things got worse when the company was forced to write down the value of its subsidiary Grubhub by more than $3 billion in August. Just Eat’s domestic challenges have also led it to consider selling the company, just a year after completing its acquisition of the US aggregator.
By fall, an industry that until this year had been characterized by a growth-at-all-costs mentality found itself at a disadvantage.
UK-based Deliveroo exited the Australian market in November last year and shortly thereafter the Netherlands after seven years of operation in the Dutch market.
Last month, India’s Zomato closed its store in the United Arab Emirates (UAE), redirecting its users to the Talabat app, which will be considered for integration with Zomato’s payment service, Zomato Pay.
Leverage a solid consumer base
In a race to keep their heads above water and keep investors interested, delivery companies are refocusing on more lucrative markets that happen to be their main bases.
For example, in its Q3 deal update in October, Deliveroo reported that while international gross deal value (GTV) fell 3%, GTV in its home market of the United Kingdom and Ireland (UKI) rose 11% over the same period.
Even better is the company’s long-term prospects in the UKI market, interim chief financial officer David Hancock told investors that Deliveroo’s market share continued to grow, adding that he was pleased with the “good performance in the UK and Ireland, which is recognized difficult consumer environment.”
Meanwhile, Zomato’s chief executive, Deepinder Goyal, recently told shareholders that 248 of the more than 1,000 mainly Indian towns in which the company operates contributed more than 90% of the total order value, signaling progress on its home soil Minimal effort required to market.
So focusing on good unit economics and doubling down on locations where they already have a solid customer base seems like an ideal strategy for delivery aggregators as consumers order less takeout amid rising food prices and tight household budgets. global market power.
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