$433M Antitrust Fine Looms Over Delivery Hero
Mod Pizza mulls bankruptcy, Kernel picks Grubhub, EU deliveries boom
Ahh, we go away for a few days on holiday and come back to a big week of news! We’ve got a couple of big brands in trouble and then an interesting new launch to keep your eyes on.
Join us Thursday in Culver City for a mobility and delivery happy hour, brought to you by GridMatrix.
Today’s edition is brought to you by Locale.
Today:
EU Eyes Big Time Fine for Delivery Hero
Mod Pizza Cooks Up A Bankruptcy
Chart Time | Grocery Delivery Worth $16.5B by 2029
Kernel Picks Grubhub to Start Delivery
POLICY | Delivery Hero Faces $433M Antitrust Fine
Delivery Hero announced over the weekend that it may face a fine of as much as 400 million euros ($433M USD,) for “alleged anti-competitive agreement to share national markets, exchanges of commercially sensitive information and no-poach agreements.” The news sent company stock tumbling around 6% on the Frankfurt exchange. Following earlier investigations (6/22 and 11/23) by the European Commission, DH had already set aside a €186M provision, which the company will now have to significantly increase. Given that the company’s entire market cap is about five and a half billion euros ($6B USD,) this fine would be no mere slap on the wrist.
The Big Picture: Analysts at Jefferies suspect this enforcement action ties back to Delivery Hero’s complicated transactions with Glovo back in 2021. In May of that year, Delivery Hero sold Glovo its Foodpanda and Pauza holdings in Romania, Bulgaria, Croatia, Serbia, Montenegro, and Bosnia and Herzegovina for €170 million; at the time, DH owned about 44% of its smaller, Spain-based competitor. A few months later, Delivery Hero bought up another 39% of Glovo, becoming its majority owner. Delivery Hero CEO Niklas Oestberg crowed that the deal would give the combined company a global leadership position, taking the top spot in a number of important markets. While Delivery Hero’s comms tried to position the tie-up as a coming together of “European-born tech champions,” any follower of old continental history will know there’s always trouble in the Balkans…
PARTNER | Locale Reinvents Food Delivery
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OPERATIONS | Mod Pizza Weighs Bankruptcy
Seattle-based pizza purveyor Mod Pizza has tapped advisors to explore a bankruptcy, potentially as soon as this week, with a company spox confirming that “all options are on the table.” The last few months have been tumultuous for Mod, with its longtime CEO stepping down and the company closing 41 locations. Sales growth had been cooling for years, with 2023 only up 5.7%, after a 12% gain the year prior; not much in an era of rising labor and ingredient prices. Mod last raised $160M in 2019, with the goal of growing from 433 to 1,000 locations by 2024, but a look at its list of open locations shows it’s managed barely any footprint growth at all.
The Big Picture: Founded in 2008, Mod Pizza was part of an Obama-era wave of fast casual pizzerias all aiming to be the next Chipotle (the name “Mod” hints that these pies are “made to order.”) Other contenders include Blaze Pizza and Pieology, both founded in SoCal. While that made them fun lunch options for office workers or mall-goers, the category stumbled during the pandemic; while pizza stalwarts like Domino’s and Pizza Hut thrived in an era of off-premises dining, Mod basically had to build its delivery capabilities from the ground up. With costs high and growth stalled, it’s no shock that this pizza’s looking a bit burnt.
CHART TIME | Projecting Grocery Growth in Europe
New research from Just Eat Takeaway.com and PA Consulting projects that the European grocery delivery market will hit $16.5B by 2029, with the Dutch proving to be particularly eager on-demand orderers. The biggest drivers of the trend are that it saves time (duh,) offers a broader selection, avoids the hassle of queues and lines, offers helpful recommendations, and is more stress-free than in-store shopping.
3PD | Robo-Restaurant Kernel Begins Delivery with Grubhub
Kernel, a closely-watched new fast casual restaurant in Midtown Manhattan, just began delivery operations, about five months after initially opening its doors. Speaking with Ottomate, Kernel President Stephen Goldstein shared that the sandwich and bowl-focused brand opted to initially work with Grubhub, because “Grubhub was very excited about partnering with us and has been a great promoter of the brand, not only on their platform but on Instagram and other outlets. We plan to make Kernel available in all channels that make sense for our business and our customers while ensuring that we protect our unique in-restaurant experience” and also that the company would welcome working with DSPs that make use of delivery robots. The company’s also retooling its restaurant interior, hoping to make its space a bit more inviting for those that may want to quickly scarf down their veggie burgers before heading back to their cubicles.
The Big Picture: Normally a restaurant with one location wouldn’t warrant much attention, but Kernel was started by none other than Chipotle’s founder Steve Ells, and counts restaurant operations royalty from the likes of Wonder, Deliveroo, Grubhub and Eleven Madison Park. Besides offering a meat-free menu, Kernel also looks to keep costs low by making heavy use of robotics, and has raised over $36M in venture funding. Scoring the temporarily exclusive partnership is a nice coup for Grubhub, which still controls about 35% of the NYC market, and has the deepest distribution reach with local restaurants, thanks to its 2013 merger with hometown hero Seamless.
A Few Good Links
Uber looks to lock out NYC drivers in bid to match supply and demand with local pay requirements regarding idle time. Amsterdam suspends Cargoroo ops. Ola tries for food delivery once more. DiDi acquires Mexican fintecher Sofiexpress. InDrive picks MIC Global for insurance. Afloat launches nationwide gift delivery. Higher driver wages translating to fewer orders. NYC seeks e-bike charging program manager. On-demand delivery blurs line between food service and retail. Cavnue smart highway goes live. Hyundai launches cute mini EV, but not in America. FCA sales slip, but Ram vans hold relatively steady. Lucid delivers record EVs. Mitsubishi sales climb. Kroger Boost Bonus Days starts this week. CO lawsuit against Kroger-Albertsons merger may proceed. Save Mart Cos acquired. High prices making grocery shoppers less brand loyal. Hurricane Beryl impacts Texas ports. Cartken raises $10M. Fisker asks court to OK inventory sale to gig worker-focused fleet lessor. Taobao adds one hour delivery. Starship celebrates 10 years of delivery robotics. Part three on the rise, fall and rebirth of food robots. Zia Lucia aims for 100 pizzerias by 2028. Delivery Hero appoints CTO. Cycle buys Ebike4Delivery. Waymo drives wrong way. EU scrutinizes Amazon for algo transparency. Bolt pushes for single EU market for shared mobility. Uber Boat launches in Europe. Hertz adds execs. McD’s uses anime to push app.
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