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Your Restaurant v. Aggregators

Delivery should be a consideration for every restaurant, no matter how big or small. This doesn’t mean to say that every restaurant should be doing delivery (for some, it just doesn’t make sense), but it is one of the most significant forces to shape the industry in the last decade and will continue to do so.

Globally, food delivery represents close to 6% of restaurant sales, and it’s a trend that’s not slowing down — especially when it comes to online ordering.
We published an article on the delivery landscape back in 2016, which doesn't feel too long ago on the one hand, but shows how far the trend has come in just two years.

Read the Full Article

Here are a few more insights related to the delivery market.

What You Can Learn from CEOs Who Made Bold Bets on Technology

Domino's, Panera, and Amazon are racking up the headlines — and convenience and delivery are key themes for each of the companies. More about how their forward-looking bets and strategies are paying off here.

How Online Food Delivery Will Change In the Next 5 Years

The delivery market will grow at a pace almost four times as fast as the foodservice industry itself through 2022. More on how online food delivery is changing foodservice around the globe here.

The Biggest Names in Food and Restaurant Delivery Tech

Billions of dollars have been funneled into restaurant delivery technologies in recent years — on par with the total value earned by all restaurant IPOs in the last 16 years. More on the biggest players in the space here.

Pizzerias are strongly represented in delivery-only/takeaway restaurant chains, accounting for 85% of sales out of the top 30 chains in the world. (Japanese bento and sushi chains make up most of the rest of the group.)

Domino’s alone claims more than a third (35.6%) of this group, and, together with Little Caesars, Pizza Hut, and Papa John’s, they account for $20.8b in sales. The market share controlled by these tech-savvy delivery-only outlets underlines the importance of prioritizing technology and convenience.

Construction and start-up costs for casual-dining chains like Texas Roadhouse, Chili’s, and Applebee’s run between $2.3m and $3.4m (excluding land). In contrast, Pizza Hut, Little Caesars, Domino’s, and Papa John’s, which are designed as delivery and takeout locations, cost about 14% as much (comparing medians).

Delivery and takeout platforms tend to have higher valuations than restaurants. Based on EV/Sales, Netherlands-based Takeaway(.com) has a valuation of 12.7x, more than 6x that of top-quartile, publicly traded restaurants in the U.S. Similarly, Delivery Hero, Deliveroo, Just Eat, and Grubhub, all reach valuations of at least 9.0x.

Aggregators' valuations benefit from the number of restaurants they are able to sign into their platforms. Takeaway has an average 3.9x EV/Sales for every 10,000 affiliated restaurants, the largest of the set. Other companies, such as Just Eat and Grubhub, show an average 1.1x for every 10,000 restaurants.

Among publicly traded companies, revenue growth for European food delivery services is considerably faster than for restaurants. Consensus estimates for 2019 expect growth to reach 28%–42% for Just Eat, Takeaway, and Delivery Hero — at least 4.5x as fast as the median for restaurants.

Food delivery aggregators have highlighted the potential success — and value — of new technologies that modernize the foodservice industry. Grubhub’s enterprise value has increased by 170% between 2014 and 2018, more than three times the increase experienced by the seven largest publicly traded foodservice companies in the U.S.

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