While some quick delivery companies in Europe have shown operating profits at the city or store level, none is making money across the board. "If private market capital is no longer willing to back the business model, then a company needs to rely on its own cash generation ability," Citi's Pollard said. read moreīuilding profitability is increasingly important as weak equity markets and a big drop in valuations of listed delivery companies make it harder for fast delivery firms to pull in outside investment. Other delivery firms have bulked themselves up through acquisitions within the industry, with Flink, which raised $750 million at a $2.85 billion valuation in December, buying France's Cajoo for an undisclosed sum last month.įlink declined to comment, but two investors told Reuters the company does not plan to enter other new markets. Germany's Delivery Hero has also agreed to take a controlling stake in Spain's Glovo in a deal valuing the target at $2.6 billion that is expected to close later this year.
DoorDash (DASH.N) of the United States last week closed its $3.5 billion acquisition of Finland's Wolt, a meal delivery and quick commerce company. Some are joining forces with existing delivery firms. "I think you're going to see different variants of this across the world, across the different inventory mixes and business models," he said.Ī push by big, well-known meal delivery companies like Deliveroo (ROO.L), Just Eat Takeaway (TKWY.AS) and Uber Eats (UBER.N) into the grocery space is already happening, as those firms strike delivery deals with convenience stores and grocery chains. Illg, in a presentation to investors earlier this year, said he sees the lines blurring between restaurant food delivery, grocery delivery, and quick commerce. "So aggregate growth is slowing down, but economics for the space are healthier." BLURRED LINES "We are seeing slower rollouts of new dark stores, lower levels of marketing investment, and diminished discounting from competition," he said. Larry Illg, chief executive of online food businesses at technology investor Prosus NV (PRX.AS), which has a 9.8% stake in Flink, said the current shakeout would ultimately benefit survivors. "It's happening quicker than we could have imagined," she said.ĭespite that, investors and executives say there is still a solid business case for grocery on demand, given the convenience it offers consumers. "The current macroeconomic climate has become incredibly challenging, with very little visibility of when things will improve," Zapp told Reuters in an email.Ĭiti analyst Monique Pollard estimates that seven or eight smaller companies have been forced to seek buyers or shut operations so far this year. London's Jiffy said last month it was ceasing delivery operations, with Zapp, which raised $200 million in January, assuming its customers. Getir of Turkey - the biggest and oldest of the fast grocery deliverers - Germany's Gorillas and UK-based Zapp have all said in recent weeks they are cutting staff, while Berlin-based Flink has also slowed hiring.
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