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Challenges, losses hit online food delivery giants in Europe, US
(MENAFN) The online food delivery landscape in both Europe and the United States has witnessed a tumultuous period marked by substantial operating losses, surpassing a staggering USD20 billion since the companies' initial public offerings. Despite a fierce battle to capture market share, prominent players such as Deliveroo, Just Eat Take Away, Delivery Hero, and DoorDash find themselves grappling with significant financial setbacks.
Shares of these leading food delivery companies have seen a notable decline from their peak valuations during the height of the pandemic. The aftermath of the pandemic-induced lockdowns has ushered in a more challenging macroeconomic environment, placing strain on consumer spending and exerting downward pressure on company performance.
Despite endeavors to showcase profitability to investors, the collective annual operating losses of these companies have now soared to USD20.3 billion. This substantial figure, compiled through calculations by the Financial Times and industry analyst The Delivery.World, spans the seven-year period since the public listings of Deliveroo, Delivery Hero, and DoorDash, as well as the emergence of Eat Take Away following a merger in 2020. Notably, these losses encompass significant write-downs associated with acquisitions and stock-based compensation.
Joe Barnett-Lamb, an analyst at UBS, highlights a shifting investor sentiment, emphasizing the increasing demand for food delivery companies to exhibit sustainable and profitable growth, particularly in the wake of rising interest rates. This evolving landscape underscores the imperative for these industry giants to pivot towards profitability amid changing market dynamics.
While competitor Uber's Eats sector has not disclosed its operating profits, the company achieved its first full year of operating profitability at the group level in 2023. This milestone underscores the growing scrutiny and expectations placed upon food delivery companies to navigate towards financial viability and sustainability.
The influx of venture capital into the "gig economy" sector, supporting food delivery services, has been instrumental in fueling growth and market expansion. However, the emphasis on low prices to attract customers and secure market dominance has contributed to the accumulation of substantial operating losses among industry leaders.
Shares of these leading food delivery companies have seen a notable decline from their peak valuations during the height of the pandemic. The aftermath of the pandemic-induced lockdowns has ushered in a more challenging macroeconomic environment, placing strain on consumer spending and exerting downward pressure on company performance.
Despite endeavors to showcase profitability to investors, the collective annual operating losses of these companies have now soared to USD20.3 billion. This substantial figure, compiled through calculations by the Financial Times and industry analyst The Delivery.World, spans the seven-year period since the public listings of Deliveroo, Delivery Hero, and DoorDash, as well as the emergence of Eat Take Away following a merger in 2020. Notably, these losses encompass significant write-downs associated with acquisitions and stock-based compensation.
Joe Barnett-Lamb, an analyst at UBS, highlights a shifting investor sentiment, emphasizing the increasing demand for food delivery companies to exhibit sustainable and profitable growth, particularly in the wake of rising interest rates. This evolving landscape underscores the imperative for these industry giants to pivot towards profitability amid changing market dynamics.
While competitor Uber's Eats sector has not disclosed its operating profits, the company achieved its first full year of operating profitability at the group level in 2023. This milestone underscores the growing scrutiny and expectations placed upon food delivery companies to navigate towards financial viability and sustainability.
The influx of venture capital into the "gig economy" sector, supporting food delivery services, has been instrumental in fueling growth and market expansion. However, the emphasis on low prices to attract customers and secure market dominance has contributed to the accumulation of substantial operating losses among industry leaders.
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