Industry Trend Analysis - Consolidation In Food Delivery: Just Eat Acquires Hungry House - DEC 2017

BMI View: Further evidence of consolidation in the food delivery sector with Just Eat ' s GBP200mn deal to acquire Hungryhouse approved by the UK Competition and Market Authority. The deal falls in line with our view of consolidation continuing in the food delivery industry (see 'Five Key Food Services Trends', May 30 2016), with greater competition emerging in this market and players having to meet consumers demand for convenience and so are focusing their offerings on efficiency and streamlining services.

Competition is heating up in the food delivery market in the UK. Just Eat has closed its GBP200mn acquisition of rival Hungryhouse, which is part of Germany's Delivery Hero group, gaining approval from the Competition and Market Authority (CMA) in October 2017. Just Eat initially agreed to buy Hungryhouse in May 2016, but an investigation of the merger by the CMA put a hold on the deal.

Just Eat Growing Strongly
Revenues(GBPmn) and Number of Restaurants
Source: Just Eat Company Filings

The clearance for the acquisition means the merger is not considered a major competition concern. Hungryhouse provides limited competition to Just Eat because it is smaller in size and offers fewer restaurants on its platform. This has made it difficult for Hungryhouse to retain its customers, making it a target for acquisition. Furthermore, we believe it is other food delivery services such as Deliveroo and UberEATS that pose a more significant threat to Just Eat than Hungryhouse, as they continue to grow and expand (See: ' Uber Contributes To Appetising Outlook For Food Delivery Market ', June 22 2016). Whereas Just Eat and Hungryhouse act purely as intermediaries and allow customers to order from takeaway restaurants whose staff then deliver the food, Deliveroo and UberEATS have their own drivers to deliver the food.

We have previously highlighted the likelihood of consolidation in the food delivery service ( see 'Five Key Food Services Trends' , May 30 2016), as crossover between platforms and pricing will continue to occur and greater competition will make it harder for smaller players to survive. Consumers are also demanding greater convenience and a consolidation among delivery services will encourage companies to streamline and make their delivery services more efficient.

Related Research :

  • Five Key Food Services Trends - 30 May 2016

  • Uber Contributes To Appetising Outlook For Food Delivery Market - 22 June 2016