Baupost, which manages about $32 billion, acquired 7.5 million shares in a transaction dated August 4. Based on Wednesday’s closing price, those shares are worth $645 million.
Just Eat Takeaway was formed by the merger of UK-based Just Eat with Dutch rival Takeaway last year. Its shares are down 19% so far this year, despite takeaway-delivery services booming during the pandemic as people ordered in more and frequented restaurants less often.
The company’s deliveries rose 42% to 588 million in 2020, driving revenue up 54% to $2.7 billion. Strong financial results from Berlin-based competitor Delivery Hero and the UK’s Deliveroo this week showed that consumers have an increasing desire for convenience and speed.
Klarman, a value investor regarded as “the next Warren Buffett,” has made other technology bets in recent months.
He invested $200 million in ad-tech company Outbrain last month ahead of its planned IPO. Last year, he revealed stakes worth more than $300 million in tech titans Alphabet and Facebook. He also holds a $400 million stake in Bill Ackman’s blank-check company, Pershing Square Tontine.
Baupost declined to comment, while Just Eat Takeaway didn’t immediately respond to an email from Insider.
Grubhub disclosed in a regulatory filing Thursday that it’s facing 14 lawsuits from investors who say the company misled them about its plans to be acquired by Dutch food delivery giant Just Eat Takeaway.
The investors alleged that Grubhub executives and board members failed to disclose key financial details and massive payouts that they stood to receive as part of the merger, and that they failed to secure the highest possible price for Grubhub’s public shareholders, harming them financially as a result.
Frank Ferreiro, the lead plaintiff in the case, said in a lawsuit filed in New York last month that when Grubhub publicly announced the proposed merger, it withheld underlying financial data it had used to make assumptions about the companies’ future performance, as well as well as “golden parachutes,” job offers, and other lucrative perks guaranteed to Grubhub executives and directors.
Ferreiro’s lawsuit alleged that investors like himself – who would get roughly 0.67 share of Just Eat stock for each of their Grubhub shares regardless of either company’s stock price when the merger closes – lack the information to determine whether they’re getting a raw deal.
“Grubhub insiders are the primary beneficiaries of the Proposed Transaction, not the Company’s public stockholders,” the lawsuit stated.
Ferrerio also said that GrubHub didn’t try hard enough to get the best deal for public investors.
His lawsuit asks the court to invalidate the proposed merger agreement and force Grubhub to seek the “highest possible price” for any sale.
GOP Gov. Brian Kemp of Georgia suggested in a Newsmax interview earlier this week that voters waiting in line to vote could order food from online delivery apps like Grubhub or Uber Eats, as he continues to face blowback for the 2021 MLB All-Star Game leaving the state over its newly-enacted voting law.
The law, known as the Election Integrity Act of 2021 or SB 202, tightens election rules in the state by limiting drop boxes, strengthening voter identification requirements, and banning water and food from being distributed by volunteers to voters waiting in line, among other measures. It has been slammed by prominent Democrats including President Joe Biden and former Georgia state House Minority Leader and potential 2022 gubernatorial candidate Stacey Abrams.
Several major companies – including Coca-Cola and Delta – have spoken out against the bill or voter suppression more broadly, which has upset Kemp and most statewide Republicans, who say the law is being distorted.
“They can order a pizza,” Kemp said of voters waiting to vote. “They can order Grubhub or Uber Eats, right?”
He added: “The county officials can provide water stations. This is just within 150 feet of the precinct. If you’re 151 feet, campaigns can set up tables, food trucks … they can hang up flyers and set up signs. This is all they [Democrats] have to grasp at.”
Kemp then accused Democratic-led jurisdictions of bungling their own election administration.
“The question too that you need to ask … Why are voters standing in line that long?,” he said. “It’s because it’s in Democratic-controlled counties. They need to do a better job of running their elections and moving people through the lines so that they’re not standing out there so long. Voters should be furious that that’s the case.”
Last year, a ProPublica and Georgia Public Broadcasting investigation found that the cause of the state’s voting issues were the state’s population growth, which has been accelerated by new residents in the blue-trending Atlanta suburbs, along with a failure to increase the number of polling precincts.
The report showed that while the state’s voting rolls had increased by 2 million people since 2013, polling locations have declined by 10 percent, especially in the populous Atlanta metropolitan region.
GOP Secretary of State Brad Raffensperger asked for additional resources and polling precincts after being elected in 2018, but was unable to push legislation through the GOP-led legislature before the 2020 presidential election, which saw Biden win the state by roughly 12,000 votes.
During the Democratic presidential primary held in the state last June, The Guardian spoke with Simone Alisa, an Atlanta voter who waited for five hours to vote after initially expecting that she might only have to wait 30 minutes.
“Something’s wrong with this picture,” she said after finally casting her vote.
Deliveroo shares rose 4% on Wednesday as the company opened trading to retail investors, a week after going public on the London Stock Exchange to institutional participants only.
The food-delivery group’s shares opened at 288 pence ($3.96), giving it a market value of £5.2 billion ($7.2 billion). That is down from the £7.6 billion ($10.5 billion) valuation its IPO was priced.
Further turbulence is expected for Deliveroo’s shares as about 70,000 retail investors begin trading their stock.
Separately, some 400 Deliveroo riders are staging socially-distanced strikes on the same day that it opened up trading to amateur investors.
Protests over what they describe as poor working conditions and low pay will take place in London and four other cities in the UK, according to a statement by the trade union Independent Workers’ Union of Great Britain.
The riders are revolting less than two weeks after The Bureau of Investigative Journalism revealed that some riders earn as little as £2 ($2.76) per hour for delivering food to customers, far below the minimum wage.
“I’m going on strike for my basic rights and those of all the other riders struggling to get by and support families on Deliveroo poverty pay,” Greg Howard, a Deliveroo rider and chair of the union’s couriers and logistics branch, said in a statement.
Howard said he has seen work conditions at Deliveroo decline for years. After working through the lockdown, he said he became infected with the coronavirus and got “very little support” from the company. On its site, Deliveroo says it offers a relief fund for infected riders.
Another rider, Ethan Bradley, told the Big Issue: “I don’t know if I’m going to be able to make the rent next week, or pay the bills. Many riders have family, have dependents and have kids to feed,” adding that security of earnings “would mean so much to them.”
A Deliveroo spokesperson told Insider that the “small self-appointed” union does not represent a majority of riders who tell the company they value its flexibility and an ability to earn over £13 ($17.9) an hour.
“We are proud that rider satisfaction is at an all-time high and that thousands of people are applying to be Deliveroo riders each and every week. Riders are at the heart of our business and today we are beginning a new consultation with riders about how we should invest our new £50 million community fund,” the spokesperson said in a statement.
Shares in Deliveroo tumbled by more than 30% at its stock market debut on March 31, when only institutions were allowed to participate. The Financial Times said its IPO has been dubbed “the worst in the history of the London market.”
Goldman Sachs, one of Deliveroo’s underwriters, bought shares worth £75 million ($103 million) to boost its stock after its IPO dwindled, the FT reported on Tuesday.
The result of Deliveroo’s IPO was deflating for many investors in UK tech, according to Christian Nentwich, founder of financial tech firm Duco. He told Insider that although there are lots of good arguments about whether the IPO’s pricing was rightly set over workers’ rights and future business risk, “frankly, no one cares in other companies, outcomes matter.”
“Protests about dual-control structure, about the strategy of burning cash to fuel growth, and so on, are irrelevant – companies can simply list elsewhere,” he said.
But brands are as strong as their weakest link and for Deliveroo, problematic worker practices are its biggest challenge, said Sophie Lord, executive director of strategy at brand consultant firm Landor & Fitch.
“Major investment houses are looking at ESG seriously and have made it clear, they won’t tolerate a failure to engage. Whether the brand now has the lifeforce to overcome the scrutiny, time will tell – as will its share price,” she said.
Shares in British food-delivery startup Deliveroo tumbled as much as 30% on its first day of trading this week, even after the company priced its shares at the lower end of its IPO range.
This marked an unfavorable start for one of Europe’s biggest IPOs in a decade.
It seems like Deliveroo may have waited too long to cash in on the IPO frenzy for firms that managed to make the most of the “COVID-19 economy,” such as US peer DoorDash. The drop is linked in part to bad timing.
“Timing is everything in the IPO market,” Robert Johnson, finance professor at Creighton University’s Heider College of Business, told Insider. “While food delivery is popular in the COVID world, there is a strong likelihood that the service will have lower demand in a post-COVID world,” he said, adding that Deliveroo’s investors were looking to take advantage of its potential to benefit from the stay-at-home environment.
But that attitude appears to be changing as investors emerge from the pandemic, he said.
Separately, insurers including Aviva, Aberdeen, and Rathbones said they wouldn’t invest in Deliveroo because its riders do not get the minimum wage, sick leave, or holiday pay. That in itself made for poor promotion.
Aside from its workers-rights crisis, the poor performance of similar stocks like HelloFresh and JustEat seems to have had an effect on Deliveroo.
“The market is pricing in the impact of the successful UK vaccination campaign, which will lead to a return to restaurants later this year and this will have a negative impact on this entire business model,” said Alexander Graf, cofounder of e-commerce tech firm Spryker.
The Amazon-backed company initially saw a lot of fanfare over its IPO. But instead of a contingent of investors rushing in to drive its price higher, the stock slumped. That translates to a paper loss for those retail investors, including its customers and top drivers, who were unlucky enough to have been tempted in and paid the IPO price, said David Morrison, senior market analyst at Trade Nation. The stock may have recovered, but “this is undoubtedly a flop by anyone’s standards,” he said.
Morrison said this may not have happened to a similar company debuting in the US because UK investors perceive companies differently.
Deliveroo aims to paint itself as a tech disruptor just like Uber, he said. But to many, it’s a company with a young workforce dashing around on unlit bikes at night with boxes on their backs in the posher neighborhoods around London.
“That doesn’t seem very high-tech to me. Unlike Uber that has scalability, Deliveroo probably won’t work outside a big metropolis like London,” Morrison said. “Also, it has plenty of competition from the likes of Just Eat and Uber Eats. Finally, it doesn’t make money. While that’s also been the case for other tech companies, such as Uber and Amazon, what will Deliveroo’s future be like once lockdown ends?”
Deliveroo CEO Will Shu is a wealthy man after the food delivery firm he cofounded floated on the London Stock Exchange on Wednesday.
Shu, the largest individual shareholder at Deliveroo, is thought to have sold around 6.7 million shares when the market opened, at the opening price of £3.90 ($5.35), making $36 million from that transaction.
The value of his remaining 6.3% stake is not currently as high as anticipated, after shares in the firm tumbled as much as 30% on its debut.
At the time of writing, the drop has seen Shu’s stake in the firm plummet to a value of $474 million in the opening hours of trading, down $144 million from $618 million at open.
The company’s listing price range for the IPO was between 390 pence ($5.35) and 460 pence ($6.33). At the higher end of the range, Shu’s stake would have been worth as much as $729 million.
Shu’s stake will fluctuate throughout the day and its value could end up being higher or lower by market close.
Deliveroo’s IPO gave it an opening valuation of about $10.5 billion but it shed more than $2.7 billion in market value in its first hours as a public firm under the ticker “ROO.”
The company, founded in 2013 by Shu and his friend Greg Orlowski, has faced criticism from large investors and activists in the run-up to its IPO over its business model.
Deliveroo’s app allows consumers to order grocery and food on demand, and the firm relies on a network of gig-economy riders to ferry the goods out.
At least six investment firms, including Aviva Investors, Rathbones, Legal & General, and Standard Life Aberdeen, announced they wouldn’t invest in Deliveroo. Some cited both its lack of full-year profitability, and the threat posed to future profitability by its ongoing reliance on gig-economy riders.
“Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face,” said AJ Bell investment director Russ Mould on Wednesday. “It had better get used to the nickname ‘Flopperoo’.”
Deliveroo fell as much as 30% in the food delivery-startup’s public trading debut on Wednesday, marking a downbeat start to the biggest initial public offering in London in a decade.
The company’s shares were trading at an intraday low of 271 pence ($3.78) per share, lower than the offering price of 390 pence ($5.35). The price recovered to 313 pence ($4.31) at 8:45 a.m. London time.
“Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face,” said AJ Bell investment director Russ Mould. “It had better get used to the nickname ‘Flopperoo’.”
The UK-based company had priced 384.6 million shares at 390 pence per share, the bottom of its marketed range between 390 pence and 410 pence ($5.65), hoping to target a valuation of 7.6 billion pounds ($10.5 billion). But it’s the first of London’s top five deals this year that wasn’t able to open at its highest targeted valuation, shedding more than 2 billion pounds ($2.7 billion) in market value on its trading debut.
Analysts say its IPO took a turn for the worse when multiple fund managers said they wouldn’t back the business due to concerns about working practices, spooking many that applied for its shares and possibly racing to dump them.
“It reflects the cautious approach big funds have shown to the stock amid concerns about working practices and governance,” said Neil Wilson, chief market analyst at Markets.com. “A lot of the big UK funds are not on side, which was failure number one.”
Amazon-backed Deliveroo, which trades on the London Stock Exchange under the ticker symbol ROO, raised 1.5 billion pounds ($2.1 billion) via proceeds from investors. It could have raised 1.77 billion pounds ($2.4 billion) had the company priced its shares at the higher end of its IPO range. But its offering was priced at the lower end because of a drop in shares for food-service firms such as JustEat and Delivery Hero on Monday, the Wall Street Journal reported, citing a spokesperson.
The company grew to the point of launching on the stock market partly thanks to the exploitation of its workers, said Connor Campbell, a financial analyst at SpreadEx. “Now, said exploitation is one of the main reasons behind its sour start to life as a public company,” he said.
It approached its market debut uniquely compared to other IPOs. Only institutional investors are able to participate in Deliveroo’s market debut on March 31, but private investors buying into its 50 million pounds ($68.6 billion) community offer can participate once unconditional trading begins on April 7.
Deliveroo was founded in 2013 by former banker Will Shu and his childhood friend Greg Orlowski. The British firm offers food, groceries, and alcohol for delivery on demand via an app, and ferries goods out to consumers through a network of gig-economy riders.
Its IPO will be a test for the UK tech startup industry, where valuations for unprofitable, high-growth companies have become increasingly bullish, even as public investor appetite for riskier businesses remains largely untested.
The company faces stiff competition in the sector from direct rivals Uber Eats and Just Eat, plus niche grocery delivery apps such as Gorillas, Getir, and Weezy.
Deliveroo primarily makes money by charging its restaurant and grocery partners a commission on each order, up to 35% in some cases. Though hoping to permanently benefit from an uplift in takeaway orders during the pandemic, the firm remains loss-making.
The firm reported a £225.5 million ($311 million) pre-tax loss for the full-year 2020, a narrower loss than the £317.7 million ($438 million) it lost in 2019. Revenues were up 54% to £1.1 billion ($1.5 billion) from 2019.
Other revenue streams include its subscription programme for regular consumers who want lower delivery fees; food procurement deals; licensing out its “Editions” dark kitchens to restaurant brands; and its “Signature” marketing platform.
Its listing is also closely watched thanks to its dual-class share structure, which sees Shu retain control over the firm in a model similar to US listings. The CEO will be granted 20 votes per share, while other shareholders will receive one vote per share.
The IPO is set to make Shu a wealthy man, since he plans to sell approximately $36 million in shares, leaving him with a stake in the company worth around $662 million.
While Deliveroo has indicated that demand from institutional investors exceeded supply in the run-up to its IPO, a number of big firms publicly stated they would not back the company.
Aviva, Rathbones, Legal & General, and others variously cited Deliveroo’s lack of profitability, and the reputational and financial risk posed by the fact its riders are gig-economy contractors rather than workers entitled to a minimum wage.
Rideshare and food delivery drivers are planning to protest Wednesday outside Uber’s headquarters in San Francisco, California, over what they say is gig companies’ continued failure to protect them nearly a year into the COVID-19 pandemic.
Drivers for Lyft, Instacart, Uber, and Uber subsidiary Postmates said in a press release announcing the protest that the companies aren’t providing adequate PPE and have refused to pay them for the time it takes to clean their vehicles.
They said that Proposition 22 – an industry-backed law passed in California in November that classified rideshare and food delivery drivers as contractors, excluding them from certain labor protections and restricting the ability of local governments to regulate gig companies – is largely to blame.
“Eleven months into this pandemic and workers are still asking for the most basic life saving protections for themselves, their families and their communities,” Cherri Murphy, a Lyft driver and organizer with Gig Workers Rising, a co-organizer of the protest, said in a statement.
“It’s really stressful – I’m always being timed when I’m driving for these companies and if I don’t get places quickly, I can be punished. It’s like the companies don’t care about making sure I have enough time to wash my hands, clean my car, and wipe down surfaces,” Lucas Chamberlain, Instacart driver and member of We Drive Progress, another group behind the protest, said in a statement.
Under Prop 22, drivers aren’t paid for the time they spend waiting for Uber or Lyft to find them a ride or delivery order or sanitizing their vehicles in between jobs. Some gig economy researchers have estimated that loophole could allow companies to pay drivers for just 67% of the hours they actually work.
“Since the COVID-19 crisis began, Lyft has provided tens of thousands of face masks, cleaning supplies and in-car partitions to drivers at no cost to them, and continue to provide access to these supplies today. Our most active drivers also received a free safety kit, consisting of a reusable cloth face covering, sanitizer and disinfectant,” a Lyft spokesperson told Insider, adding that Lyft doesn’t profit off PPE.
Uber told Insider that it has allocated $50 million toward safety supplies for drivers and said it has provided 30 million masks and other cleaning supplies to drivers worldwide.
But while California law requires most companies to provide PPE and sick pay to their employees and to pay into the state’s unemployment insurance program, Prop 22 classified drivers as contractors, allowing gig companies to save far larger amounts by not having to cover those costs. Uber and Lyft drivers last year claimed they’re owed $630 million in back pay as a result of the misclassification. One study found that between 2014 and 2019, the two companies should have paid $413 million into California’s unemployment insurance fund.
Uber spokesperson Kayla Whaling told Insider the company “has tried to do everything we can to support [independent contractors] while they support our communities, including distributing PPE free of charge, providing financial assistance for those who were diagnosed with COVID-19, helping connect them to new work opportunities on Uber or elsewhere, and consolidating information to help them apply for PPP loans or federal unemployment assistance.”
Still, Uber hasn’t always delivered on those promises, and when it has, it’s often only done so following backlash from drivers, regulators, courts, or the media.
Insider reported last April that, despite Uber’s claims it would pay drivers who tested positive for COVID-19, the company had denied legitimate claims and even locked out drivers who requested sick pay.
Wednesday’s protest – which Gig Workers Rising and We Drive Progress said will include a socially distanced rally – comes as some lawmakers in California are already pushing for more accountability for gig companies who rely on rideshare and delivery drivers.
San Francisco supervisor Matt Haney said he plans to introduce legislation that would require companies like Uber and Lyft to provide PPE and pay drivers for time they spend cleaning their vehicles.
“In the midst of this devastating pandemic, workers have gone above and beyond to protect themselves and our communities by purchasing protective equipment and cleaning supplies and spending their personal time sanitizing their cars to save lives. It is outrageous that while delivery app corporations continue to rake in profits, workers are forced to shoulder these burdens while struggling to make ends meet,” Haney said in a statement.
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Amazon-backed food delivery firm Deliveroo is now valued above $7 billion after raising $180 million in fresh capital.
The new round was led by two of Deliveroo’s existing backers, Durable Capital Partners and Fidelity. Both are investors that put money into public as well as private firms.
UK-headquartered Deliveroo, which has experienced a boom in custom amid national lockdowns, also on Sunday confirmed plans for a stock market debut. The company, though run by American CEO Will Shu, is expected to list on London’s Stock Exchange.
That Durable Capital and Fidelity are upping their stakes now signals confidence in Deliveroo’s prospective share price and future growth. As one industry source put it: “Why buy in at $13 billion when you can buy in at $7 billion now?”
The gambit has worked before.
Both Durable Capital and Fidelity invested in Deliveroo’s US equivalent, DoorDash, around six months ahead of its December IPO at an approximately $16 billion valuation. On IPO, DoorDash topped a $32 billion valuation and its market cap now hovers around the $60 billion mark.
Deliveroo is based in the UK and competes with the likes of Uber Eats in Europe and parts of Asia. It does not currently operate in the US. It offers food, alcohol, and grocery deliveries on demand via an app and relies on a network of gig-economy cyclists and motorcyclists to ferry items to customers.
It was founded in 2013 by Shu, formerly an investment banker, and Greg Orlowski. Orlowski left in 2016, and Shu remains the CEO of the business.
An IPO would cap a rollercoaster year for the firm.
As is typical for high-growth, venture capital-backed firms, Deliveroo has been mostly loss-making to date. As the UK, its primary market, went into lockdown in the spring and restaurants shuttered, the firm warned it may collapse.
The regulator eventually cleared the funding in April, concluding there was no antitrust threat from Amazon’s involvement. Deliveroo’s business also began to improve as restaurants turned to delivery apps for revenue and consumers upped their takeaway orders, bored of home cooking.
Having initially warned of collapse, Deliveroo towards the end of the year said it became “operationally profitable” in 2020.
Food delivery apps like Uber Eats and DoorDash seem nearly ubiquitous in the restaurant industry – if you’re running a restaurant and you want people in the area to know about you, getting on at least one of these apps is essential for your exposure.
These apps, however, take a cut of what restaurants earn – even if you order pickup and not delivery. Most of them take 20% to 40% of each order, which is, in many cases, nearly the entire profit margin on the food they’re selling.
The people behind ChowNow saw this trend and worried that it would take down the small, local restaurant as we know it, and decided to do something about it. ChowNow is a service that sets up food delivery for restaurants on its own app (available on Android and iOS), like other food delivery service apps. However, the company doesn’t charge a percentage for it.
What to know about ChowNow
Unlike UberEats or DoorDash, ChowNow doesn’t stop after putting a restaurant on its app. It does more – it helps make it easy for a restaurant to have its own ordering app, and an easy-to-use order function on its website.
Instead of taking a percentage of each order, ChowNow structured its service as a paid monthly subscription – the base cost is $149 a month, with a one-time $399 setup fee per location, but these prices go down when a business signs a contract for a longer period. Its annual plan is $119 a month with a $199 initial setup fee, and the two-year annual plan is $99 a month, with the same discounted setup fee.
On top of helping a restaurant set up its own ordering app and website, ChowNow also offers a wide range of other services to customers, including comprehensive training, an iPad for order consolidation, an ongoing marketing strategy, and 24/7 support.
One thing to note about ChowNow is that it is not actually a delivery service. ChowNow does not employ its own delivery drivers – it is, more or less, a marketing team and middle man. Instead, the company gives restaurants the option to hire and use their own delivery drivers for orders that go through the site.
If restaurants don’t want to hire delivery drivers, though, they’re not out of luck – ChowNow has partnerships with some of the delivery services they are competing with, including Postmates, DoorDash, UberEats, in different areas. ChowNow isn’t trying to drive these companies out of business – just reimagine how they function so the process works for everyone.
ChowNow can help customers, too
As a customer, using ChowNow doesn’t have to be that different than using other ordering apps. It works more or less the same, but when you use it instead of one of the other apps, you’re doing your part to help local restaurants keep more of what they earn.
When you download the ChowNow app, it looks a lot like any other ordering app you may be familiar with. You enter your location, and it shows you a list of available restaurants in your area, and you can tap on them to see their menu. From there, you just add items to your cart, check out, and wait.
If that’s all you use ChowNow for, then you’re still helping your local small businesses – plus, you might be helping yourself out, too. Because of the high commissions on apps like GrubHub and Postmates, many restaurants increase their prices on the app in order to compensate for what would otherwise be a net loss. So when you use an app that charges restaurants a fee, you could end up paying more for your food than you need to.
However, customers can also look at the ChowNow app as a map to new restaurants – ideally, they would try a restaurant once, and, if they decide they really like it, simply go and download that restaurant’s app, rather than adding it to a list of favorites. This puts customers in a position to get bonuses and deals that the company may be offering.