This week online food ordering site Delivery Hero announced its acquisition of Lieferheld (as first reported by Gerstartup.com), the market leader in the space in Germany. Lieferheld’s network extends to over 5,200 restaurants across 700 German cities. The company also announced a partnership with hungryhouse in the U.K. at the same time, which could be a precursor to yet another acquisition in the future. Combined, Delivery Hero and hungryhouse now reach 12,000 restaurants in Germany, Switzerland, Russia, Australia, Mexico and the U.K.
Compare that to Just-Eat, the current global market leader, which announced in September of 2011 that it now counts 20,000 restaurants as partners. London-based Just-Eat serves the U.K., Denmark, India, Argentina, Canada, Spain and Switzerland. So far, the two companies have had relatively little head-to-head interaction, but with both now playing in the U.K. market, sparks are set to fly. Just-Eat secured $48 million in funding from investors including Greylock Partners and Redpoint Ventures in March 2011.
Neither has entered the U.S. market, which has left room for a number of other companies to take up strong positions there, including GrubHub. GrubHub announced a $50 million funding round in September 2011, when it also announced the acquisition of Campusfood and Allmenus. GrubHub claims 15,000 restaurant partners, and U.S.-based Snapfinger has 12,000.
With €15 million (around $20 million U.S.) in combined funding between Delivery Hero and Lieferheld, the new European powerhouse is trailing the others in terms of venture capital, but it still anticipates taking in €150 million ($198 million U.S.) in revenue during its 2012 fiscal year. Delivery Hero co-CEO Fabian Siegel told BetaKit via email that he believes the partnership with hungryhouse in the U.K., which is Europe’s largest food delivery market, will help the company grow rapidly. “We are confident that we will grow even quicker than we did in Germany and eventually we believe that we wil be bigger than Just-Eat in the U.K.,” he said.
Siegel also confirmed that Delivery Hero’s ambitions go beyond Europe, however. “Delivery Hero’s ambition is to build the global category leader in online food ordering,” he said, but conceded that the U.S. remains a longer-term goal. “While the U.S. is a huge market, we currently focus on securing our position in Europe and growing in faster-growing emerging markets.”
As competition increases, the space will likely become an even bigger hotbed of M&A activity as companies prepare to take each other on for a dominant position in the global online food ordering business. But other players like Seamless are still innovating at the product level even as the biggest international companies focus on extending their reach. Seamless released its native iPad app earlier this week, which the company’s VP of Marketing Ryan Scott told us is a key part of its overall strategy.
“Today, more than 25 percent of Seamless’ total order volume comes through our iPhone and Android apps, compared to one percent in July,” he said in an interview. “On a more practical note, we wanted to ensure that our members have easy access to Seamless on all their favorite devices.” Seamless has 8,000 partner restaurants and acquired MenuPages in September of 2011.
Both in the U.S. and abroad, online food ordering is becoming big business. It’s a trend larger restaurant chains should also be watching, since the proliferation of online ordering sites provides customers with a one-stop alternative to going through major restaurant brands that offers a much greater array of choices.