International taxi service Uber’s food delivery arm, Uber Eats, is in talks to purchase U.K. restaurant industry disruptor Deliveroo, according to a report by Bloomberg.
Citing sources close to the deal, Bloomberg says that the sale could be worth “several billion dollars”; Deliveroo was most recently valued at just over £2 billion.
Food delivery has become a priority for Uber, but Deliveroo is understood to be reluctant to lose its independence at a time when it has expanded to more than 200 cities globally and has significantly expanded its influence on not just the delivery market, but the restaurant industry more generally in the past 24 months.
Eater London reported earlier this year that Deliveroo’s long-term strategy would be reliant on rider-less vehicles and AI in kitchens. The brand’s Deliveroo Editions offshoot — reliant itself on dark kitchens — is the first stage in that long term strategy, and would be a considerable coup for Uber given its relative immaturity in the delivery market; it is, currently, “just” delivering.
A Euromonitor senior analyst suggested that the potential deal was an indicator of Deliveroo’s market strength, as well as an example of future consolidation in an increasingly saturated sector. With over half of takeaway orders now placed online, Uber would be able to marshall Deliveroo’s considerable growth in virtual restaurants to its advantage, while vindicating Deliveroo’s strategy that it sees as the only route to profitability:
Deliveroo has recorded an astonishing growth since it started its services in London in 2013. The company now operates in 11 other countries with more countries expected to be added soon. It is still early to speculate on a deal between Uber and Deliveroo since Deliveroo’s been reluctant historically to give up independence despite very high consolidation processes over the past 3 years on the food delivery market in Europe.
Particularly, in its biggest market, UK, the company now operates in more than 100 cities. Its positive performance in the past 12 months and the recent announcement of the introduction of their new Marketplace+ app this summer ultimately has resulted in Deliveroo becoming a much larger threat to the bigger operators in Europe such as Just Eat.
The home delivery/takeaway market is expected to be one of the most promising categories in consumer foodservice in Western Europe with an expected compounded annual value growth of 5% over the next 5 years. Consolidation thus is expected to remain high with possibly, Uber-Deliveroo deal being next.
The share price for Just Eat — a rival U.K.-based food delivery company — fell by more than 6.7 percent when the London stock exchange opened this morning, signalling the predicted unease that will meet the amalgamation of the two biggest food delivery players in Europe.
A Deliveroo spokesperson told Eater London, “as a matter of company policy, we do not comment on speculation.”
Uber Eats did not immediately respond to Eater London’s request for comment, but later said, “unfortunately, we can’t comment on this story.”
- Uber Is in Early Talks to Buy Europe’s Deliveroo [Bloomberg]