- September 21, 2016

Delivery Hero CEO on Amazon, Uber Food Push: Let Them Come

  • – Rocket Internet-backed startup says learning curve is steep
  • – Core business is profitable, CEO Östberg says in interview

The chief executive officer of Delivery Hero Holding GmbH said the experience his food-ordering platform has gained in its five years in service gives him an edge over Amazon.com Inc. and Uber Technologies Inc. encroaching onto his turf in Europe.

“There are a lot of learnings that we have done that they will have to do,” CEO Niklas Östberg said in an interview with Bloomberg TV in Berlin, where the Rocket Internet SE-backed startup is based. “It’s very hard for someone to come in at a very late stage and make it sustainable and profitable.”

Delivery Hero, which provides a web-based ordering platform for restaurant meals and also handles food delivery, works with about 300,000 restaurants in 33 countries. Sales are growing by more than 50 percent annually, and the company is profitable, except for the Foodora delivery business it purchased from Rocket a year ago. Repeating that feat will be difficult even for tech-focused giants like Amazon and Uber stepping outside of their core businesses, Östberg said Wednesday.

While Amazon’s aggressive expansion has upended the global retail industry, Östberg’s nonchalance is rooted in part in a track record that’s somewhat of an outlier in a Rocket Internet cosmos studded with startups showing limited signs of progress. Earlier this month, Rocket caught investors off guard by scaling back the value of its fashion group, a key component of its portfolio, and a week later of an online furniture retailer. Not so Delivery Hero, according to Östberg. Rather, there’s “an opportunity to maybe mark it up,” the Swedish CEO said.

Rocket shrank losses at several of its startups in the second quarter, including at its fashion and furniture business, it said Thursday. It didn’t release detailed numbers for Delivery Hero, even though it did so in its full-year report for 2015. Rocket Internet will give a slightly more detailed update on Delivery Hero this year, Chief Financial Officer Peter Kimpel said on a call with analysts, declining to elaborate why it didn’t release numbers this quarter.

Uber Eats, an outgrowth of the car-sharing service, will start in Munich and Berlin, Die Welt reported last month, citing the head of the German business, Christoph Weigler. Amazon, the online retailer, and Uber Eats have already entered the U.K., where Delivery Hero partners with more than 10,000 restaurants, is profitable and growing “very fast” as a No. 2, Östberg said.

“Can that be repeated by any other competitor? Maybe, but it hasn’t been proven yet,” he said.

Amazon and Uber Eats are expanding into an already crowded field of online food-delivery services in Europe, with rivals including Just Eat Plc, Deliveroo and Takeaway.com Holding BV, which plans to raise at least 350 million euros ($390 million) selling shares in Amsterdam this month.

Business models vary: Delivery Hero and Just Eat operate online-only portals for processing orders, while Deliveroo and Delivery Hero’s Foodora also take food from restaurants to a customer’s front door. Food tech startups raised a record $5.7 billion last year, an increase of 152 percent from 2014, according to CB Insights.

Delivery Hero, 37 percent owned by Rocket Internet, is also backed by Point Nine Capital, General Atlantic and Insight Venture Partners. It has raised 1 billion euros in financing so far, most recently in June 2015 with a valuation of more than $3.1 billion.

Delivery Hero has long been touted as an IPO candidate. The company will make sure it can “very quickly” execute a share sale once it deems the time to be right, Östberg said, declining to say when that may be.

Recent News