Delivery Hero


Delivery Hero SE is a European multinational online food-delivery service based in Berlin, Germany. The company operates in 40+ countries internationally in Europe, Asia, Latin America and the Middle East and partners with 500,000+ restaurants.
Delivery Hero processed more than 369 million orders in 2018.
While Delivery Hero is headquartered in Germany with offices worldwide, as a "gig economy company" nearly all of the company's deliveries are carried out by workers using bicycles and cars, dispatched via the company's smartphone apps.
In general, and in contrast to recent legal precedents in Canada and Australia, Delivery Hero does not classify these couriers as employees. This policy has led to ongoing legal battles and labour disputes, and may be linked to the shutdowns of Delivery Hero's operations in several countries.

History

Delivery Hero Holding was founded in Berlin by Niklas Östberg, Kolja Hebenstreit, Markus Fuhrmann and Lukasz Gadowski in May 2011, with the goal of turning Delivery Hero into a global online food ordering platform. Under the leadership of Niklas Östberg and Fabian Siegel, Delivery Hero first expanded to Australia and the United Kingdom in 2011. In early 2012 the enterprise acquired Lieferheld in Germany and acquired a stake in Foodarena, Switzerland.
Delivery Hero then raised €25 million in new funding to finance acquisitions in four European countries: Sweden, Finland, Austria and Poland. In August 2012 Delivery Hero started expanding in both South Korea and China through YoGiYo and Aimifan and the Asian expansion continued in 2013 when Delivery Hero increased investment in TastyKhana following a successful cooperation period.
In 2012 and 2013, the harsh competition between the various delivery service online portals led the German press to dub the events as cyberwar between the big web-portals. There were reports of frequent Denial-of-service attack attacks against each portal, accusations of data stealing as well as numerous lawsuits of the portals against each other. Delivery Hero was one of the more aggressive actors, and in 2012, the Delivery Hero office in Berlin was raided by police and the prosecution pressed charged against the Delivery Hero management. Delivery Hero was prosecuted for perpetrating DoS attacks against its competitors and stealing data from the other web services.
In 2014 Delivery Hero acquired a controlling stake in Latin American market leader PedidosYa and in August 2014 the group acquired German market leader and rival, pizza.de.
According to TNW Tech5 2014, Delivery Hero was one of Germany's top 3 fastest growing start ups at that time.
In April 2015, Delivery Hero acquired South Korean delivery service Baedaltong, one of the chief competitors of its own YoGiYo service. One month later Delivery Hero bought the Turkish competitor Yemeksepeti for 530 million Euro, which was the largest acquisition in this business sector to date. In October 2015 Delivery Hero also acquired Munich-based food delivery service Foodora from Rocket Internet.
On 10 December 2016 Delivery Hero acquired Foodpanda, a company valued at an estimated $3 billion at that time.
In December 2016, the company announced the sale of its UK business Hungryhouse to Just Eat for at least £200m. However, the deal needed to be cleared by the Competition and Markets Authority of the UK before completion. On 12 October 2017, the CMA gave preliminary approval for Just Eat to acquire its smaller rival.
Delivery Hero went public in a listing on the Frankfurt Stock Exchange on 30 June 2017. The listing was the largest by a European technology business in almost two years. Delivery Hero raised almost €1bn from the offering.
In December 2018, Delivery Hero sold their German operations to Takeaway.com.

Investment

In November 2011, Delivery Hero received its first investment funding. In this financing round Team Europe, Holtzbrinck Ventures, Tengelmann Ventures, Kite Ventures and ru-Net together invested €4 million. The second funding round took place in April 2012. This time the existing investors raised their investments by €25 million to support the international growth of the enterprise. In August 2012 Delivery Hero received an additional €40 million funded primarily by Kite Ventures and Kreos Capital. A Series D financing round saw Delivery Hero receive $30 million from Phenomen Ventures in the latest Series D financing round.
In January 2014 Delivery Hero announced a Series E financing of $88 million led by Insight Venture Partners. A further $85m followed in April 2014 and was used to strengthen Delivery Hero's presence in core markets.
In September 2014 a further $350m of investment was secured from existing partners and Swedish fund Vostok Nafta. This was the largest investment in a European start up since 2009. In December 2014 the company raised another €287 Million from Rocket Internet. The total investment size by Rocket Internet was €496 Million in primary and secondary for a 30% stake in Delivery Hero. Three months later Rocket Internet increased its stake in Delivery Hero to 39%. In February 2018, Rocket Internet reduced its stake in Delivery Hero. As per the latest happening, the shareholding of Rocket Internet in Delivery Hero has reduced from 24.3% to 21.2%.
In January 2017, CEO Niklas Östberg announced that he wanted his company to be ready for an IPO in the second quarter of that year. Delivery Hero would focus on the integration of the recently acquired competitor Foodpanda. According to manager magazin, he was aiming at a valuation of about 3.5 billion Euros.
In May 2017 Naspers, a global internet and entertainment group and one of the world's largest technology investors, invested EUR 387 million in Delivery Hero. After increasing its stake in September 2017, Naspers today holds a stake of app. 26% in Delivery Hero, and so became the largest shareholder of the company.
In December 2017, Delivery Hero led the Series B funding round of Rappi, the largest on-demand delivery company in Latam, operating in 5 countries with over 30,000 couriers. Delivery Hero invested $105M and now holds a stake of 20%, becoming the largest shareholder of the company and bringing Niklas Oestberg to its board of directors. Despite this investment, Rappi will continue to operate as an independent company for the time being. Furthermore, the company is also an investor in Glovo.

Brands and markets

Delivery Hero is active in more than 40 markets across the Americas, Asia, Europe, and MENA.
The company runs a multi-brand approach with approximately 30 different brands worldwide. Delivery Hero's portfolio of brands includes among others: Carriage, Hungerstation, Foodora, Foodpanda, PedidosYa, Talabat, Yemeksepeti, Yogiyo & Otlob.

Acquisitions

Delivery Hero was very active in M&A, the company's acquisitions include:

Criticism

Classification of couriers as independent contractors

In contrast to Delivery Hero's 2018 annual report, which includes "riders" as employees, Delivery Hero's national subsidiaries usually classify their workers as independent contractors and not employees. This classification frees Delivery Hero from responsibilities towards its workers, including the right to Workers' compensation, Sick leave, overtime, Unemployment benefits, hazard pay, and protections against wrongful Termination of employment or firing.

Pro-employee rulings and subsequent shutting-down of Foodora in Australia and Canada

Couriers working for Delivery Hero's brands have mounted campaigns to assert their rights, including several successful legal battles. In Australia and Canada, these campaigns led to DH subsidiary Foodora's shutdown in the countries.
In each case, Foodora maintained that the shutdowns were carried out in response to market forces. However, Delivery Hero's 2018 Annual Report shows that the company does indeed assess country-by-country the costs and risks of government policies including social security, stating:
"Country specific and economic requirements, including employment legislation and social security, increase the complexity of the rider management as part of the own delivery services. The constant analysis of regulatory developments is needed to find the best approach in advancing the logistics business. Non-compliance with regulatory requirements may lead to higher rider costs and possible non-compliance fines. This also includes the risk of unavailability of rider personnel restraining the further expansion of the logistic services. This risk is considered as medium."
Australia
In 2018 Foodora Australia abruptly shut down operations while facing several lawsuits: including one from the country's Fair Work Ombudsman which accused the company of sham contracting, and several court cases relating to unpaid benefits and wrongful dismissal.
The Transport Workers Union subsequently accused Foodora of shutting down to “avoid responsibility for paying its riders millions of dollars in backpay as a result of wage theft.”

Canada

In 2019, Foodora couriers Montreal and Toronto began organizing. Subsequently, with the support of the Canadian Union of Postal Workers, Foodsters United, a group of couriers in Ontario, organized a vote on whether or not to unionize with the CUPW. Foodora Canada then challenged the vote prior to the announcement of results, on the basis that Foodora couriers were independent contractors and therefore did not have the right to unionize.
The then ruled that Foodora was misclassifying couriers as independent contractors, and, in a decision which was widely considered a win for couriers, ordered Foodora to consider its couriers "dependent contractors", a new category which affords workers some of the rights of employees. The decision only applied to couriers in Ontario, but was considered to be precedent setting.
In April 2020, two months after Ontario Labour Relations Board decision, Foodora Canada announced that it was shutting down, citing oversaturation of the Canadian market.
Reaction from Foodsters United
Immediately following the announcement that Foodora Canada was shutting down, Foodsters United issued a statement condemning the decision as cruel, saying:
"Delivery Hero, like all gig economy employers has treated this as a numbers game where market control takes priority over the lives of real hard working couriers. We must not forget that this is a multinational corporation working to control the market on their terms. This is the reality of the gig economy on full display...
The company would rather leave thousands of vulnerable workers without any income than to fix glaring issues with management and tech/infrastructure....
...Foodora and Delivery Hero must be held accountable to the workers - couriers have made millions for this company and deserve to be treated with dignity and fairness."