Convenient Food Delivery Services Expand Around the World
Over the past 5-7 years, several major companies have grown exponentially, continuing to expand the previously limited food delivery service to thousands of restaurants and millions of customers.
FinancialBuzz.com News Commentary
NEW YORK, Feb. 27, 2020 /PRNewswire/ -- The food delivery industry is growing at a rapid pace all over the world due to the convenience, variety and relatively low cost of service. Over the past 5-7 years, several major companies have grown exponentially, continuing to expand the previously limited food delivery service to thousands of restaurants and millions of customers. In particular, cities and urban centers have become the epicenter of this evolution. One of the major factors driving the market growth is the rising penetration of smartphones and internet connection, which makes the food delivered service very easily accessible. And yet despite the rampant growth in recent years, the industry remains young and certain significant issues remain to be solved; the competition for low pricing which hurts the bottom line, the struggle for timely delivery and the lack of service in more rural areas are all major issues. In response, companies are emphasizing on enhancing logistic capabilities and consumer experiences. Now, numerous companies are adopting enhanced delivery methods, which can considerably speed up delivery and reduce operational costs, like using robots or drones. For example, according to an article by Forbes, students at George Mason University and Northern Arizona University have been getting food delivered by robots since the beginning of 2019. Later in the year, the company behind those robots, Starship Technologies, announced that it had raised USD 40 Million, led by Morpheus Ventures, to expand its service to 100 college campuses. Overall, the global revenue from online food delivery will reach USD 200 Billion by 2025 and with a CAGR of 14%, according to a research by Frost & Sullivan. China Xiangtai Food Co., Ltd. (NASDAQ: PLIN), Grubhub Inc. (NYSE: GRUB), Uber Technologies, Inc. (NYSE: UBER), Yum China Holdings, Inc. (NYSE: YUMC), Alibaba Group Holding Limited (NYSE: BABA)
By region, North America is home to more 10 online food delivery companies, with Grubhub leading the way as the most valuable one, accounting for over a one third of the total market share, according to Forbes. Europe also has more than 10 food delivery companies, with Dutch company Just Eat serving eight countries in the region, and controlling over 83% share of the total U.K. market share. In the meantime, in terms of number or orders and deliveries, the Asia-Pacific region is the absolute leader. This region accounts for a 55% share of the global online food delivery market share. Forbes also indicates that China alone registered over USD 34 Billion in online food delivery revenues in 2018, with two of its biggest players, Ele.me and Meituan Dianping recording about 10 billion deliveries between them back in 2018. In addition, in a wake of the Coronavirus outbreak in China, local food delivery services are discovering that they can play an important role in helping the public dealing with a crisis. According to recent data published by analytics site Sensor Tower, grocery delivery and recipe apps have climbed to the top of the charts as people continue to mostly stay indoors in areas where the virus is prevalent. For instance, Fresh Hema, Alibaba's grocery delivery app peaked on February 8th, reaching nearly 100,000 downloads in a single day, compared to an average of approximately 29,000 per day during 2019.
China Xiangtai Food Co., Ltd. (NASDAQ: PLIN) announced breaking news this morning that, "the Company has launched online ordering service to communities in Chongqing, China where residents have limited outdoor access to food purchase due to the implemented epidemic control regulations following the spread of COVID-19.
On February 1, 2020, the Company, through its primary operating subsidiary Chongqing Penglin Food Co., Ltd, entered into a business cooperation agreement (the "Agreement") with Chongqing Casin Community Comprehensive Service Co., Ltd., a wholly-owned subsidiary of Casin Smart Service Group Co., Ltd. ("CSSG"), a leading property management service provider in China.Pursuant to the Agreement, Company's products can be ordered online through CSSG's e-commerce platform and get delivered to homes within five apartment complexes managed by CSSG in Chongqing, consists of approximately 70,000 residents.
Ms. Zeshu Dai, Chairwoman and CEO of China Xiangtai Food, commented, "We are excited to work with CSSG to launch a online order and delivery service. It is a good start for us to serve five communities managed by CSSG and benefit over 70,000 residents. We hope to leverage the platform and deliver our products to more communities and help more people in the epidemic."
About China Xiangtai Food Co., Ltd. - Headquartered in Chongqing, China, China Xiangtai Food Co., Ltd, is a food company primarily engaged in pork processing. The Company's operations span key sections of the pork processing value chain, including slaughtering, packing, distribution, and wholesale of a variety of fresh pork meat and parts. Primarily focused on pork products, the Company also offers other fresh and processed products, including beef, lamb and poultries. Through its core values, the Company is committed to maintaining the highest standards of food safety, product quality, and sustainability to provide high-quality, nutritious, and tasty food in a responsible manner through its portfolio of trusted brands."
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Grubhub Inc. (NYSE: GRUB) announced this week that it had launched Grubhub+, a new membership program loaded with rewards (Seamless+ also available). Grubhub+ goes above and beyond other subscription programs with member benefits like 10% Cashback and donation matching to high impact organizations like No Kid Hungry. "Whether they're trying us out for the first time or order many times a week, diners already love our exclusive Perks," said Sam Hall, Grubhub's Chief Product Officer. "Now with Grubhub+, we're excited to dramatically expand rewards while doubling our charitable impact and assisting with our elite support teams. We've pulled out all the stops for this program." Matt Maloney, Grubhub Founder and CEO explained that, "Generous diner rewards are at the core of Grubhub's competitive strategy. As the only profitable company in our space, we are leveraging our profits to stay laser-focused on having the most restaurants in the network and giving away as much free food as possible… With the most restaurants and the best loyalty programs, we believe that we have the right formula and are ideally positioned for success."
Uber Technologies, Inc. (NYSE: UBER) recently published financial results for the fourth quarter and full year ended December 31st, 2019. In the report, the Company indicated that its two major services, Rides and Eats grow 20% and 73% year-over-year, respectively, on a constant currency basis. "Eats achieves comparable Gross Bookings in a top 10 Rides country - As proof of the strength of our platform, in only three years since launch, Eats has achieved comparable Gross Bookings to Rides in Australia despite Rides having launched eight years ago. Eats subscriptions continue expansion - Eats subscriptions rolled out to all U.S. cities (ex-California) and to Taiwan and South Africa, our first international markets to launch this product," Uber reported.
Yum China Holdings, Inc. (NYSE: YUMC) announced recently that it had been actively mobilizing resources in a multi-pronged response to the outbreak of novel coronavirus (COVID-19). As part of its efforts, the Company immediately introduced enhanced preventative health measures that prioritize the health of employees and customers, including the introduction of innovative new contactless delivery and corporate catering services. The initiative has since been expanded, resulting in the delivery of over 70,000 free meals to nearly 500 hospitals and community health centers across mainland China. In addition, the Little Sheep brand has donated 20,000 instant hot-pots to numerous organizations actively involved in efforts to combat the coronavirus. The Company's brands have also introduced innovative new services. Since January 30th, the KFC and Pizza Hut brands in China have rolled out contactless delivery services nationwide and contactless in store pick-up services at selected locations in China.
Alibaba Group Holding Limited (NYSE: BABA) announced back in 2018 the acquisition of all outstanding shares that it does not already own in Ele.me, a leading online delivery and local services platform in China, in a transaction that implies the enterprise value of Ele.me at USD 9.5 Billion. Alibaba and its affiliate Ant Small and Micro Financial Services Group Co., Ltd. Owned at the time approximately 43% of the outstanding voting shares of Ele.me. This acquisition has deepened Ele.me's integration into Alibaba's ecosystem and advanced Alibaba's New Retail strategy to provide online and offline consumer experience in the local services sector. In the most recent financial results, published earlier this month, Alibaba reported revenue from local consumer services, which primarily represents platform commissions, fees from provision of delivery services and other services provided by our on-demand delivery and local services platform Ele.me, was RMB 7,584 Million (USD 1,089 Million) in the quarter ended December 31st, 2019, an increase of 47% compared to RMB 5,159 Million in the same quarter of 2018, primarily due to the increase in the volume of orders delivered.
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