Holy Mackerel, come to think of it, you may want to consider ordering that! This week Yelp announced it purchased online food ordering service Eat24 for $134 million.
This from Yelp’s blog: Eat24 is an online food ordering app and website that covers about 20,000 restaurants across the country. As a Yelp Platform partner, they’ve been a valuable driver of our growth in the restaurant category while continuing to build an impressive business of their own.
Eat24 is a competitor to Grubhub. They were founded in 2008 and had managed to get a widget for ordering food on Yelp which allowed them to compete against the other food ordering sites. Now that this deal is happening, these two companies will become BFF’s. Jeremy Stoppelman, Yelp’s chief says online ordering is “a key vertical for Yelp.” The objective is to “enhance our user experience [allowing] our large consumer audience to transact directly with businesses.”
You should also make note that while they’ve spent a bundle of money acquiring Eat24, they also plan on expanding their ad sales staff by 40 percent this year.
Now when you look at Grubhub, their most recent quarterly report which was quite good you’ll understand why they are acquiring online restaurant delivery service — DiningIn — and entered into an agreement to take over another online delivery service — Restaurants on the Run — marking its entry into the food delivery business. So this dynamic deal should cost Grubhub about $80 million and get them delivery business from 3,000 restaurants across all major U.S. cities.
Market reports claim food delivery companies charge a 20–30% premium for their services, but GrubHub’s charges are much cheaper. This pricing has afforded them a significant growth in the past (average dinners increased 47% year over year in 2014 organically).
Unfortunately for Grubhub, Amazon.com and Google Inc. have been taking an interest in the delivery market; but these new acquisitions by Grubhub are good since they add volumes and scale to its business. If Grubhub survives with its lower-margin business model, it might put pricing pressure on competitors like Square, which recently signed a deal to acquire on-demand restaurant delivery start-up, Caviar.
Let’s consider how this industry has taken off overseas with online food delivery service provider Foodpanda, which has acquired the Indian operations of Just Eat, a UK-based company in the same business. Some history for you — Just Eat India used to be HungryBangalore back in 2006. At present the Indian online food delivery industry is estimated to be worth $14 billion. With this buy Foodpanda will expand its presence in India to 200 cities and partnerships to 12,000 restaurants. It also turns out that this is the second Indian acquisition by the company in three months. In November, it had acquired TastyKhana.
But wait! There’s more, Foodpanda has gone and done deals in Malaysia, Philippines, Pakistan, Singapore, and Thailand. The company has fully acquired Food Runner, which also has a franchise relationship in Indonesia.
These acquisitions will make them Boss across the South-East-Asian and Asian food delivery.
In a press release Ralf Wenzel, Co-Founder and CEO of foodpanda group, has been quoted saying “With the recent acquisitions foodpanda becomes the market leader across South East Asia. The combined expertise and experience of several great local companies allow us to significantly improve our offering and service to our customers”.
Let’s not forget the purchases in Europe as well, like Donesi.com, a food delivery service active in Serbia, Montenegro and Bosnia and Herzegovina, along with Pauza.hr in Croatia and NetPincer in Hungary. Globally, the company is active in 39 countries on five continents. According to a report in The Economic Times, Foodpanda will eventually merge TastyKhana and Just Eat India, to bring its food delivery offerings under one brand.
Ladies and gentleman, this online food delivery business is booming and it’s just going to get bigger. The laziness of people and the growing fact people just are not taught the simple art of boiling an egg means more money in the pockets of those that connect the restaurants with the mouths that want it. I would definitely recommend getting on top of this line of media work, who knows you just may get some free appetizers out of it.