Delivery Hero Plans a Big IPO. Does Its Business Model Have a Moat?

Delivery Hero Plans a Big IPO. Does Its Business Model Have a Moat?

Delivery Hero expects trading to begin on the Frankfurt stock exchange on June 30.

Bloomberg: “Delivery Hero Seeks $4.9 Billion Valuation as IPO Price Set“:

Delivery Hero operates a variety of brands including Lieferheld, Foodora and Foodpanda, through which it either brokers deliveries from restaurants or brings the food to customers’ homes itself, by bicycle. […]

It competes with app-takeout services including Just Eat Plc, GrubHub Inc. and Holding BV. Newer rivals include Inc., which is expanding its Amazon Fresh same-day grocery delivery offering, and Uber Technologies Inc.’s food-on-wheels service Uber Eats.

Delivery Hero’s value was between 3.5 billion euros and 4 billion euros after a 387 million euro investment by South Africa’s Naspers Ltd. last month, according to a person familiar with the matter. Naspers owns about 10 percent.

Here is the official document from Delivery Hero (PDF).

I remain sceptical regarding the long-term prospects of companies like Delivery Hero. To put it bluntly, I don’t see a moat around the business model. Companies with asymmetric business models to Delivery Hero et al can rather easily come into this space. It is not difficult to imagine this space being dominated by Amazon and ridesharing companies like Uber. Both possible parties deploying this use case to keep their delivery networks well utilized. (And thus calculating differently..)


Delivery Hero will become the fourth major online food delivery firm to go public in the past few years globally, following Grub Hub, Just Eat and, which have all seen their shares soar since listing. […]

“The valuation is punchy … but it’s the same for any growth business across industries as investors are desperate for growth,” one fund manager at a major European institutional investor said. “Food delivery offers a huge potential if you consider that only about 80 percent of restaurants do deliveries.”

Delivery Hero’s margins at 10-11 percent currently lag its competitors, with Just Eat at 15 percent and Grub at 17 percent. But it could boost margins to 13 percent when it handles the delivery itself, and still has room to raise fees, the source familiar with the matter said.

​I doubt this room for raising fees remains there once Amazon and Uber et al get serious about delivering meals over their logistics networks in those markets.

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One comment

  1. […] I hinted at this logistics aspect yesterday regarding Delivery Hero’s coming IPO: […]


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