When Delivery Costs More Than the Food You Ordered
Comment of the Day

May 26 2023

Commentary by Eoin Treacy

When Delivery Costs More Than the Food You Ordered

This article from Bloomberg may be of interest. Here is a section: 

Delivery companies as publicly listed entities are under pressure to churn out profits. And there’s very little competition. Consolidation, particularly since that start of the pandemic, has left three dominant players in the US. DoorDash had 65% of food delivery sales as of April, including those from its Caviar unit, according to Bloomberg Second Measure, a provider of transaction data analytics. Uber Eats has a 25% share, aided by its 2020 acquisition of Postmates. Grubhub Inc. — which has over the years absorbed Seamless, Eat24, and Tapingo before being acquired by Just Eat Takeaway.com — has 9%. 

Eoin Treacy's view

Delivery apps are a vestige of the success stories that characterised the pandemic living experience. The market is not big enough to accommodate all the companies vying for dominance so the best capitalised are most likely to gain markets share as the weaker companies disappear.
DoorDash collapsed in 2022 but has held a sequence of higher reaction lows since October and is now testing the upper side of its base formation.

Just Eat Takeaway.com spent a great deal of cash acquiring competitors all over the world, not least Grubhub. It is now faced with the challenge of both paying for and absorbing all those companies. The share is barely steady within its range. Delivery Hero has a similar pattern.

This is another example of the winnowing effect of tighter liquidity. There is only room for a small number of dominant companies with several pandemic success story niches. 

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