We are constructive on global food delivery.

Our deep-dive into 14 leading delivery markets points to >20% CAGR for the industry over the five years to 2024e. This is rooted in

  1. growing online penetration,
  2. greater order frequency driven by cultural shifts, and
  3. rising order values.

Comprehensive UBS Evidence Lab data provides unique insights into the key drivers: consumer behaviour (3 datasets), brand attributes (3), demand (4) and supply (7). Data analysis shows that restaurant inventory has a stronger relation with revenue growth than app downloads or search trends.

Unit economics analysis and evidence points to logistics profitability inflection

The profitability of the marketplace is well understood, but evidence from operators
supports our view that logistics profitability is at an inflection point. Our unit economics analysis suggests logistics can be profitable in several markets, but higher costs and potential regulation are challenges in Europe. Hybrid models can achieve LT EBITDA margins of 20-40% (5-7% of GMV). Logistics helps access greater wallet share in adjacent categories like grocery ($7.6trn), while denser networks drive better margins.

Investments will likely cloud path to profitability; consolidation a key driver

Clear market share structures are emerging organically or through consolidation, leading us to expect a steady decline in marketing investment. But the UK and the US could be tough in 2021. Investments in grocery and newer regions cloud the near-term profit picture for some. With the emergence of four major groups ex China we see global consolidation as phase 3 after in-market (phase 1) and cross-border (phase 2) efforts.

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