Foodpanda gobbles up Hong Kong operations of delivery.com as growth of food-delivery industry spurs consolidation

Germany headquartered company recorded 500 per cent growth in orders in Hong Kong last year as industry takes off

PUBLISHED : Friday, 18 March, 2016, 2:21pm
UPDATED : Friday, 18 March, 2016, 5:09pm

Online delivery start-up foodpanda, which is headquartered in Berlin but operates in 40 markets, has acquired the Hong Kong operations of New York-based delivery.com, accelerating the consolidation of the city’s crowded food delivery market.

Backed by Frankfurt-listed Rocket Internet, foodpanda said it has acquired the business of one of its local rivals in Hong Kong to grow its base of corporate clients. The size of the deal was not disclosed.

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“The [delivery.com] team has built an excellent operation in one of our key markets and will help foodpanda continue to drive high growth here,” said Ralf Wenzel, chief executive officer of foodpanda.

This is the fourth such acquisition foodpanda has made in Hong Kong after it snapped up food ordering companies Koziness, Dial a Dinner and Maidan last year.

Foodpanda’s acquisitions have been fuelled by more than US$300 million raised through a series of funding rounds.

Online food delivery services have been growing globally and Hong Kong is no exception with foodpanda, its sister company foodora, delivery.com and London-based Deliveroo entering the market in the past two years.

Euromonitor International estimates the food delivery market in Hong Kong from outlets without seating will be worth HK$423.2 million (US$54.43 million) in 2016, while foodpanda’s sister company foodora claims the city’s market is already worth nearly five times this much, or HK$2 billion.

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Delivery.com was launched in Hong Kong in April 2014 as the city’s high density and relative wealth was seen as similar to its base in New York.

The delivery.com service in Hong Kong first focused on corporate orders and later expanded to individual orders and groceries.

“Foodpanda and delivery.com Hong Kong were the first two entrants in this market and working together we will continue to solidify a position of leadership in on-demand ordering and delivery in the region,” said Didier Bensadoun, president of delivery.com Hong Kong.

London-based online takeout delivery start-up Deliveroo opened in Hong Kong in November as part of a global expansion supported by a US$100 million funding round.

In an interview earlier this week, Wenzel said Deliveroo’s arrival in the city had boosted foodpanda’s orders as consumers have become more aware of online ordering options. Foodpanda recorded 500 per cent growth in orders in Hong Kong last year.

James Giancotti, chief executive officer of start-up rating company Oddup expects to see more consolidation this year.

“Foodpanda are looking to consolidate their position and build market share away from Deliveroo, who has entered the market in a big way,” he said. “It’s an exercise of who stays above water the longest.”

Foodpanda cut 15 per cent of its workforce in Hong Kong in February, citing increased automation of its ordering and delivery processes.

Also in February, foodpanda sold its food delivery businesses in Spain, Italy, Mexico and Brazil to London-based rival JustEat for US$140 million to focus on markets in Asia, the Middle East and Eastern Europe.

Foodpanda closed its Vietnam business in December.