Online meal delivery firms knocked off course by coronavirus crisis
By Anna Rzhevkina, Hilary Russ and Toby Sterling GDYNIA/NEW YORK/AMSTERDAM (Reuters) - The lockdown of millions of people at home across the globe due to the coronavirus should have been the perfect recipe for success for the burgeoning online meal delivery market. But some of the world's largest players, including Uber Eats and Just Eat, which is being bought by Takeaway.com, have been hit by a double whammy: restaurant suppliers have been ordered to shut and with more time at home to cook for themselves, some people appear to have lost their appetite for takeaway. While many restaurants have switched to offering takeaway, giving the online services a bump in members signing up, some of the world's biggest food chains using the apps, such as McDonald's and Wagamama, have closed in the United Kingdom for the time being
By Anna Rzhevkina, Hilary Russ and Toby Sterling
GDYNIA/NEW YORK/AMSTERDAM (Reuters) - The lockdown of millions of people at home across the globe due to the coronavirus should have been the perfect recipe for success for the burgeoning online meal delivery market.
But some of the world's largest players, including Uber Eats and Just Eat, which is being bought by Takeaway.com, have been hit by a double whammy: restaurant suppliers have been ordered to shut and with more time at home to cook for themselves, some people appear to have lost their appetite for takeaway.
While many restaurants have switched to offering takeaway, giving the online services a bump in members signing up, some of the world's biggest food chains using the apps, such as McDonald's
Data from SimilarWeb, which tracks downloads and use of smartphone apps and websites across key European markets, highlights the scale of the slowdown across Europe as the pandemic spread and governments ordered people to stay at home.
In France, Spain and the United Kingdom, Just Eat and Uber Eats saw drops in average daily users ranging from 2% to as much as 23% in March, compared with the averages for January and February. Deliveroo also saw falls in France and Spain, although a small increase in the United Kingdom, the data shows.
The falls reflect a big drop in repeat customers. Some 90% of activity on apps is reorders, according to SimilarWeb.
The data is in stark contrast to the double-digit percentage increases in grocery delivery volumes over the same period as people rushed to stock up as they went into lockdown.
The numbers offer a glimpse into how the virus has quickly changed people's food ordering and cooking habits and has put the brakes on a fast-growing industry.
Before the virus, the European industry, worth about $16.5 billion in revenue, was expected to grow by 10% per year over the next decade, according to Statistica.
Just Eat and Deliveroo declined to comment on the data. An Uber spokesman said the impact of the virus had varied widely across Europe, but it had seen big increases in restaurants and shops signing up to its app.
Food delivery orders in Europe https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqyzxvxm/FOOD%20DELIVERY.PNG
ASIA AND AMERICA
In other parts of the world, the picture is less clear.
"Asia entered lockdown first and signs of recovery are taking place there first," said a spokesman.
Giving the first insight into the impact in China, the original epicentre of the outbreak with the first lockdowns, Chinese food delivery service Meituan Dianping <3690.HK> said last week it expected to report a first-quarter loss after a drop in orders.
In the United States, Grubhub
"New York is not doing well because residents have fled, restaurants are closing and people are scared," Grubhub CEO Matt Maloney said in an interview.
"In Seattle, people feel like the worst is over, they're feeling a little bit more confident," he said. "Everyone else is a mixed bag in between those two."
Uber Eats, Grubhub, Delivery Hero
That should provide a boost to their own membership numbers in the long run once orders improve. Grubhub signed up more than 20,000 new restaurants in March, far exceeding its previous monthly record of 5,000, said Maloney. Deliveroo got 3,000 new UK restaurants on board last month, a spokesperson said.
The loss of business has prompted some to branch into new markets. Delivery Hero is expanding into supplying groceries to customers stuck at home and Uber Eats has broadened its grocery offering by teaming up with supermarkets like Carrefour
Uber Eat's grocery and convenience store sales have more than doubled in some European cities, the Uber spokesman said.
Delivery Hero is offering its grocery service for free and is trying to make it pay by selling high-margin consumer products, CEO Niklas Ostberg told Reuters.
He said it was also offering a personal shopper service in Saudi Arabia and some Latin American countries, where a delivery person goes shopping for a customer.
Deutsche Bank analysts reckon such moves may only partially offset the drop in takeaway orders, which they expect will hurt 2020 commission fees and dent growth in the first half.
"Whilst the COVID-19 outbreak could intuitively be seen as beneficial to online food delivery players, with millions of people under lockdown, we conclude that this is not the case," they said in a research note this week.
They cut their 2020 core earnings (EBITDA) forecast for Just Eat Takeaway by over 40% and their revenue estimate by 10%, while reducing EBITDA and revenue forecasts for Delivery Hero by 17% and 9% respectively.
The worry is that even when restrictions ease and restaurants start reopening, business may not pick up as quickly as hoped. Belt tightening due to job losses may also stymie households' spending power. Some restaurants won't survive.
In Grubhub's hardest-hit markets, restaurant closures have reached as high as 30%, affecting mostly independent outlets which don't have cash on hand, said Maloney, the company's CEO.
"It's hard to imagine them reopening without some significant government funded stimulus," he said.
(Additional reporting by Emma Thomasson in BERLIN and Paul Sandle in LONDON; Writing by Jospehine Mason; Editing by Keith Weir and Mark Potter)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.