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Highlights:
- Food ordered through a food delivery app sometimes costs more than its in-restaurant price.
- This additional cost may reach up to one-third more of the order value.
Ever wondered why the food prices on the menu of a delivery app are more than the restaurant's menu for dine-in or takeaway prices? You're not alone. Most customers are clueless about the billing structure. In fact, the 'premium' on the prices, for the convenience of getting it delivered to your door, is sometimes as high as 30% of the order value. It is in addition to the delivery and service charges levied by these apps.
During the Covid-19 pandemic, Britons relied on food delivery apps as lockdown restrictions forced restaurants and cafes to remain closed for dine-in services. The use of such apps rose sharply during this time, with companies, like Deliveroo doubling their customer orders compared to pre-pandemic times of 2020.
Image source: Andrew Angelov, Shutterstock.com
Aggregators charge a commission from the restaurants to be listed on their platform. This commission goes up to as high as one-third of the actual price of the dish. Restaurants pass on this additional cost to the customers, who must also pay the aggregators for the delivery and service charges. The delivery charges generally depend on how far is the restaurant from the delivery location, while the service charges are typically based on the order value.
Against the backdrop of this information, let us take a look at two London-listed food aggregators and see how their stocks have been performing.
Deliveroo Plc (LON: ROO)
The company operates an on-demand food delivery platform and connects grocers, consumers, and restaurants through its online marketplace. It has over 190,000 riders onboard and operates across 11 markets worldwide, including the UK, Europe, Asia, and the Middle East. Recently, Deliveroo appointed Scilla Grimble as its Chief Financial Officer, who will take over the responsibilities before June 2023.
The shares of the company haven't been so popular in terms of returns. Its 12-month return currently stands at -67.60%, while the year-to-date (YTD) return stands at -53.29%. As of 11:44 am GMT+1 on 11 July 2022, the share price hovered at GBX at 98.12, up 0.70%.
Just Eat Takeaway.com NV (LON: JET)
The Netherlands-headquartered company connects restaurants and consumers. Besides the UK, it also offers its services in the US, Europe, and a few other countries through partnerships. The company processed 264 million orders in the first quarter of 2022, and its Gross Transaction Value (GTV) climbed to €7.2 billion during the period. It recently partnered with e-commerce giant Amazon in the US to extend its benefits to Amazon Prime customers.
Just Eat Takeaway.com currently has a market cap of £2,832.69 million. Its shares were trading at GBX 1,365.80, up 2.16%, at 11:53 am GMT+1 on 11 July 2022. The stock price has seen a downward trend in the last 12 months, falling over 78.89%.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
