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Delivery Hero's Foodora Expands as Rivalry Intensifies

Published on Feb 22 2016 11:12 AM in Restaurant tagged: Europe / Deliveroo

Delivery Hero's Foodora Expands as Rivalry Intensifies

Delivery Hero Holding’s Foodora is expanding in Europe as the restaurant meal delivery service seeks to beat competitors including Deliveroo to new markets.

Foodora is adding 11 additional locations - including six German cities and Gothenburg in Sweden - in the coming weeks, Julian Dames, the service’s co-founder, said in an interview. The Berlin-based company allows customers to order meals from neighborhood restaurants that don’t deliver and have them dropped off at their door.

Competition in the quickly growing restaurant meal delivery business - especially in Germany, Europe’s biggest economy - is heating up. Foodora’s main rival is Deliveroo, which raised $100 million in a funding round led by DST Global and Greenoaks Capital in November and is active in six German cities. Belgian startup Take Eat Easy, backed by Rocket Internet, left the German market last September.

“Our strategy is to expand to more cities in our markets as quickly as possible, because we see huge demand and it’s a big advantage to be first,” Dames said by phone. “Germany is our home market - we’ll soon be present in 13 cities, and we’ve consciously decided we want to cement dominance here.”

Services such as Foodora, DoorDash and GrubHub promise to channel more orders to restaurants for a flat delivery fee or a slice of the revenue. Investors have in the past backed the sector. Food tech startups raised a record $5.7 billion last year, an increase of 152 per cent from 2014, according to CB Insights. Delivery Hero, which last year bought Foodora from Rocket Internet, raised $110 million in June, valuing the company at over $3.1 billion.

Foodora, which has 450 employees and manages an army of about 4,000 riders, has bought smaller rivals in the past to expand to new markets including Canada and Australia. It won’t need to raise external financing because it has the backing of parent Delivery Hero for its expansion, Dames said.

Foodora, which delivers from about 5,000 restaurants, is also expanding to The Hague and Utrecht in the Netherlands, Tampere and Turku in Finland, and German cities including Bremen and Hanover.

News by Bloomberg, edited by Hospitality Ireland

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