DoorDash-Deliveroo: Ordering in

Consolidation was on the menu for the companies behind the biggest food-delivery apps in the first half of 2025. In February Delivery Hero’s biggest shareholder, Prosus, agreed to acquire Amsterdam-based Just Eat for $4.3 billion. Then, in May, the biggest food-delivery business in the United States, DoorDash, announced it had reached an agreement to buy Deliveroo for $3.9 billion – a hefty, but not unreasonable, price tag considering the two companies had few overlapping markets and the value of Deliveroo orders in 2024 was $9.5 billion.  

Cashing out
May 6th was a bittersweet day for Deliveroo CEO Will Shu. That’s when news broke that company he co-founded in 2013 had accepted a takeover bid from DoorDash. Clearly, this was not the outcome the Connecticut native had in mind when, fresh from seeing revenue soar during Covid, he decided to take Deliveroo public in 2021. On the eve of its stock market debut, its share price was listed at $5.36 dollars. However, fears that the food delivery sector was in a post-Covid bubble proved well-founded when Deliveroo’s share price fell by 30% on the opening day of trading in what was swiftly dubbed the ‘worst IPO in London’s history’ by Fleet Street.

Following that blow to its image, headwinds including increased competition from rivals such as Just Eat and Uber Eats, economic stagnation and new labor regulations covering gig-economy workers conspired to halt Deliveroo’s growth momentum. Deliveroo has had a tough time translating its success in the UK to continental Europe, pulling out of the German market in 2019, Spain in 2021 and the Netherlands in 2022.  

The UK and Ireland account for over 60% of Deliveroo’s business and Shu suggested that the prolonged economic gloom both there and in continental Europe was a significant factor in Deliveroo having to sell up. “Europe has had an economic malaise,” he stated in a recent episode of the HD in HD podcast, citing an October 11th Financial Times article which found that per capita spending in the UK had fallen by 3% since Covid, whereas in the US it had increased 12.7%.

When pressed on what the company didn’t do as well as competitors, he offered up “the link between finance and analytics is something we could have done better,” in addition to having better marketing, although he disagreed with the suggestion Deliveroo should have been more aggressive earlier in the M&A market.

Ironically, just a few months prior to the DoorDash takeover, Deliveroo announced its first-ever annual profit, making $3.8 million in 2024. A case of too little, too late it seems. Shu’s comments notwithstanding, Deliveroo’s sizeable market share of the lucrative food delivery business in major European cities such as Paris, Rome and London proved highly appetizing for DoorDash. 

A few months prior to the DoorDash takeover, Deliveroo announced its first-ever annual profit, making $3.8 million in 2024

DoorDash may be the top food delivery service in the US, where it has around a two-thirds market share, but Uber Eats is the major player in Western Europe, however, and at $13.7 billion, its global turnover outpaces DoorDash’s by $3 billion.

Speaking to CNBC, DoorDash CEO Tony Xu said the Deliveroo deal was part of its strategy to make DoorDash a multi-product company on a global scale. “We are adding to our footprint in Europe, operating in 30 countries on the continent and 45 countries globally. We also want to learn and navigate all the local challenges that we see and don’t underestimate the peers we compete with.”

Food fight
In April 2024, the European Parliament voted to introduce the EU Platform Workers Directive. This new piece of legislation includes rules to improve the working conditions of gig economy workers, such as correcting the employment status of food delivers who have been misclassified as self-employed. Deliveroo management had cited changes to the legal status of its workers in some European countries when withdrawing from markets on the continent.

Like its sister company across the pond, DoorDash has been grappling with the demands of US delivery workers, who have been clamoring for better compensation and benefits. Addressing their concerns comes with a hefty price-tag, as Xu admits. “Dashers [food delivery workers] ought to be able to have the flexibility of a type of work like ours and also protection and benefits. In general, costs go up, but efficiency, as well as the ability to produce new features to grow the order behavior in our system, also grows. It’s always this balancing act – you’ll obviously have to invest in order to achieve a certain outcome that delivers financial results.”

With meal delivery growth margins declining, both DoorDash and Deliveroo have been attempting to diversify their services to include delivery of groceries and convenience items, and the hope from the Deliveroo side is its new owner’s greater financial muscle and its experience innovating in the US market can put the company on the path of accelerated growth and profitability. DoorDash has experience running a successful food delivery operation in Europe. In 2022 it acquired Finland’s Wolt for $8 billion, which has since expanded to a several new markets in Central and Eastern Europe.