Delivery Hero Raises $586 Million

Date: 15-03-2015

Berlin Based Rocket Internet has acquired a 30% stake in Delivery Hero.  Delivery Hero is a competitor to Rocket Internet’s FoodPanda.  This is part of a major purchasing spree from Rocket Inter in a move that sees significant consolidation of the online ordering and food delivery business across Asia and Europe.  It also purchased JUST EAT and Food Runner.  These businesses will form part of the Rocket Internet ‘Global Online Takeaway Group”

Rocket Internet now has food delivery businesses in 39 countires, covers 140,000 restaurants and it claims to process 78 million orders per month.

Delivery Hero claims to be operating in 24 countries at the moment and that it is the market leader in 19 of these markets.  One country where it is not the market leader is Australia, where the leader and number two companies, Menulog and Eatnow, recently merged their operations as part of a buyout from Menulog.

Delivery Hero has not stated if any of the existing shareholders have exited as a part of the deal.

Delivery Hero’s competition against their own Restaurant Customers

Delivery Hero in Australia partakes in the common industry practice of registering a similar domain name and putting up a website thank creates the impression that the website is the Restaurant’s official website, when if fact it is operated by Delviery Hero and used to charge 10% commission for all of the orders acquired.  One question is how many customers are confused by the multiple websites.

Delivery Hero competitor website - Check out FROLO for a Delivery Hero Alternative.
Many Restaurants have a website which appears to be the Restaurants official website, when in fact it is owned by Delivery Hero.

Delivery Hero has raised $1.2 Billion in total.  What does this mean for Restaurants?

It will be interesting to see what will happen in the medium term. The obvious danger for Restaurants is that if there is significant consolidation of online ordering companies, they will be able to ratchet up the prices.  We have seen this with companieslike Realestate.com.au and carsales.com.au.  They originally started out with a significant price advantage versus their competitors, which were ads in print media.  As they stole almost all of the market share from print media, they were able to start focusing on increasing prices.  Online ordering, with the high 10% commissions from Restaurants is a very profitable industry.  The raising of cash is to enable more consolidation and rapid growth.

Delivery Hero Alternative?

Marketing4Restaurants’ Free Restaurant OnLine Ordering System is shaping up as a significant Delivery Hero Alternative in Australia, with intentions to grow in to other markets over the next 12 months.  The system, which allows restaurants to take online orders on their own website for free (excluding third party gateway fees) also allows Restaurants to keep their customers contact details secure.  Some Restaurants are looking to save over $500 per week as they transition their customers away from using Delivery Hero and other online ordering companies.  There appears to be a gentlemens agreement to keep fees at around 10%.  This level of commission is unsustainable for many Restaurant owners.  As more Restaurants look for ways to decrease costs, this will put pressure on the industry accepted 10% and will significantly alter the profitability of the online ordering companies.

If you are looking for a Delivery Hero Alternative, check out the Free Restaurant OnLine Ordering system.  It’s Free 🙂

Please Share this:

Want to learn more about Restaurant Marketing?

Try the 5 Minute a Day Restaurant Marketing MBA. Every day hundreds of Restaurant owners all over the world receive an email with a hint, tip, tactic, strategy, idea or just a bit of inspiration to help them find new customers and turn them into repeat customers.