What Deliveroo being sold for £2.9bn means for your takeaway ...Middle East

Food delivery giant Deliveroo has agreed to a takeover by its US rival DoorDash in a deal worth around £2.9bn.

The deal follows a fresh offer last month from San Francisco-based DoorDash for London-listed Deliveroo in a move set to create a combined firm with a presence across 40 countries and handling about $90bn (£67.7bn) of orders each year.

The firms said: “The combination with Deliveroo will strengthen DoorDash’s position as a leading global platform in local commerce, enabling the combined entity to better serve businesses, consumers and couriers.”

Deliveroo’s co-founder Will Shu said DoorDash and Deliveroo were “like-minded” with a shared strategic vision and aligned values.

“Together, we will be even better positioned to serve consumers, merchants, riders and local communities. The enlarged group will have the scale to invest in product, technology and the overall consumer value proposition,” he said.

The takeover will help DoorDash grow its market share in Europe, competing against Just Eat and Uber Eats, as it adds Deliveroo’s largest market, Britain and Ireland, to its roster, along with others.

The takeover will help DoorDash grow its market share in Europe, competing against Just Eat and Uber Eats (Photo: Nathan Stirk/Getty)

In 2024, Deliveroo and DoorDash had orders worth about a combined $90bn, the companies said, with roughly seven million and 42 million monthly active users, respectively.

Deliveroo, which was founded in 2013, operates in nine countries and works with more than 130,000 riders across the world, made sales of around £2bn last year.

DoorDash, also set up in 2013, was co-founded by chief executive Tony Xu, who has led the company ever since.

Any final deal will be subject to regulators and shareholders approval. Analysts say that the bid could be subject to a counterbid and that Amazon is “the most likely counterbidder”. Amazon is already a major shareholder in Deliveroo.

App consolidation

The deal is the latest evidence of the industry consolidating, after South African owned Dutch-based tech investing company Prosus agreed to buy Amsterdam’s Just Eat earlier this year. And before that Turkish group Getir bought up rivals Gorillas only then to retreat back to its Turkish market.

Food delivery companies, many of which have struggled to make profits in a sector with very tight profit margins, are being pushed to combine after rapid acceleration during the pandemic saw them run out of steam after restrictions later came of.

Russ Mould, director of investment at AJ Bell, said: “The food delivery market has found it hard to grow at a rapid clip in recent years, leading to widespread consolidation.

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“Arguably, there were too many companies chasing the same opportunity and that’s unsustainable. We’re now in the phase where only the strongest will survive and they’re the ones picking up smaller rivals who realise their future is best part of a bigger entity, not going it alone.”

Deliveroo made its first annual profit last year when it reported a pre-tax profit of £12m on revenues of £2.1bn.

DoorDash reported a profit of $193m from a loss of $23m the year before. It operates in over 30 countries and delivers more than 2.5 billion orders a year, helping it notch up revenues of $10.7bn (£8bn) in 2024.

Its founder, Xu, said: “I could not be more excited by the prospect of what DoorDash and Deliveroo will be able to accomplish together.

“We’ll cover more than 40 countries with a combined population of more than one billion people, enabling us to provide more local businesses with the tools and technology they need to thrive.”

The deal is expected to complete in the final three months of 2025 but will need to be approved by Deliveroo’s shareholders.

Both companies have said it is too early to say what the takeover will mean for the Deliveroo brand, whose distinctive bike couriers are very recognisable in many city and town centres. No decision has been made whether or not its name will be kept when it merges with DoorDash.

Up to 900 staff from both companies are expected to lose their jobs as a result of the deal. A small number of Deliveroo’s headquarters staff are expected to be among them. Its headquarters is expected to remain in London.

DoorDash has 23,700 employees, and more than a million riders who deliver food in the countries it operates in. It has already said it will abide by the voluntary partnership agreement between Deliveroo and the GMB union which acts for riders, and has no plans to make any material changes to contracts with riders.

Eamon O’Hearn, national officer of the GMB, said the union was looking forward to meeting with DoorDash and “welcomed the comments about continuing the working arrangement with GMB on behalf of riders”.

Better tech and price rises

The pandemic closed tens of thousands of restaurants and takeaways. Deliveries threw a lifeline to hundreds of them to help keep them afloat and even offered the promise of expansion to others.

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DoorDash’s financial heft may improve the food delivery sector’s tech offering, potentially improving the experience for both restaurants and consumers alike. Xu said: “DoorDash’s strong operating playbook with Deliveroo’s local expertise to invest in innovation and execution at an even higher level.”

Deliveroo promises a “wealth of choice” for consumers, providing fast, reliable delivery of restaurant food, groceries and retail products. Continued direct delivery for restaurants enables them to serve customers beyond their immediate geographical location, tapping into broader markets, reaching customers unable to visit in person.

Others fear prices could go up for both restaurants and consumers as a consequence of merging two of the stronger delivery firms.

Also on the debit side, restaurants can also find themselves more dependent than ever for their survival on the delivery firm apps to generate revenue. That reliance could see themselves squeezed even more by the delivery firms for access to customers

Fiercely competitive market

There may be fewer rivals in the market but the margins remain tight so competition remains fierce.

In the US where competition between the big two delivery firms – DoorDash and UberEats – is already heating up, Uber is suing DoorDash in court accusing it of “bullying” restaurants into working exclusively with them by threatening to issue penalties or demote restaurants in the DoorDash app.

Uber has said it is seeking unspecified damages and a judgment that would force DoorDash to change its business practices. DoorDash has denied the claims.

DoorDash also announced plans to buy restaurant booking platform SevenRooms for $1.2bn, as part of a push to tighten its grip on the food delivery and restaurant services market.

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