The merger of the UK’s biggest food ordering app Just Eat and its Dutch equivalent last year created that rare company whose name is also its strategy: to persuade customers not to cook at home or go out but to Just Eat Takeaway.

The lockdowns of 2020 created the perfect recipe for that ambition to be fulfilled. That shone through in the rapid growth revealed by annual results this week from JET and its UK rival Deliveroo, following strong numbers last month from Uber, DoorDash and Delivery Hero.

Just Eat Takeaway’s gross merchandise volume — a measure of consumer spending across its services — went up by 51 per cent last year. Delivery Hero, the group which runs delivery services in 40 countries, and Deliveroo, which is preparing for a $10bn initial public offering, both reported an annual jump of around two-thirds in customer spending. Uber Eats more than doubled its gross bookings, while DoorDash’s marketplace gross order volume tripled in 2020.

Each of these companies measures the top-line activity on its apps in a slightly different way, making it difficult to draw a true like-for-like comparison between the figures.

However, one proxy of relative market share can be gleaned from analysing anonymised payment data. According to Edison Trends, which tracks more than 2.5m card transactions in the US, DoorDash gained share at the expense of rivals throughout 2020. It estimates that its market share increased by about 27 basis points a week while competitors, especially those with smaller scale, lost out.

DoorDash’s rise is also supported by app download data from Sensor Tower — which can be used as an indicator for acquiring new customers. It showed that the San Francisco-based company’s rate of growth was higher in every month last year when compared with rivals. In the UK, Deliveroo outperformed peers on this measure.

Charts showing that food delivery app downloads rose at the start of the pandemic

It is clear that the pandemic supercharged the food delivery space. “The crisis seems to have lifted all boats,” said Andrew Gwynn, analyst at Exane BNP Paribas.

After a rocky first few weeks of the pandemic, when many restaurants had to shutter altogether, the online food companies that did best were those who operate their own fleet of couriers, such as Deliveroo.

That logistics capability enabled them to deliver food from places that had never signed up for takeaway apps before the pandemic. Tens of thousands of new restaurants and grocery shops joined Deliveroo last year to take its total to 115,000, while Uber and DoorDash now have 675,000 and 450,000 individual stores and outlets respectively selling through their platforms.

Chart showing that for food delivery companies, converting sales to profits is proving tricky

That left Just Eat Takeaway — which has traditionally let the pizza joints and kebab shops that list on its app to deliver orders using their own staff — racing to recruit couriers. In the past few months, for the first time, Just Eat’s orange-jacketed riders have appeared on the streets of London to take on Deliveroo’s distinctive army of turquoise-clad mopeds and cyclists.

As a result of Just Eat’s heavily discounted delivery drive, what is normally among the most profitable of food delivery companies saw pre-tax losses jump 67 per cent to €147m. Most of its rivals posted even wider losses, but Deliveroo and DoorDash were able to rein in marketing spending last year, which on some measures pushed them closer to profitability.

Jitse Groen, JET’s chief executive, believes its base of more traditional takeaway restaurants and customers will leave it better placed than its rivals when restrictions ease. Coupled with the completion of its merger with US-based Grubhub, he anticipates an “acceleration” of order growth this year, even after 2020s frenzy.

Treemap showing the global food delivery market size

“When the pandemic started, there was quite a large increase in logistical orders in basically all our markets,” he said. “If you can’t go to a restaurant, you will order in. So the inverse will happen when restaurants reopen.”

Deliveroo chief executive Will Shu counters that even when restaurants were briefly allowed to reopen in the UK last summer, the London-based company “continued to grow rapidly and the order frequency of consumers remained high”.

Nonetheless, Deliveroo and DoorDash are both warning of slower growth in customer spending this year.

“The concern I would have is the second half of the year,” said Gwynn. “They all need to keep the top line growing and it could be pretty difficult.”

Additional reporting by Patrick Mathurin and Chris Campbell

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