DELIVER HERO has worked well over the past couple of years. In August 2020, he climbed DAXthe index of the stock exchange of the most valuable companies in Germany. It is present in 50 countries on four continents. Revenue for the third quarter was 1.8 billion euros ($ 2 billion), up 89% over the same period in 2020. “We have grown 100% to Corona, 100% during Corona, and we will grow 100% after Corona,” it said. Niklas Ostberg, CEO of a Swedish firm based in Berlin.
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In terms of the number of orders, Delivery Hero is more than twice as large as its large American competitor DoorDash. Regardless, DoorDash has a market capitalization of $ 58 billion, which is more than Delivery Hero ($ 31 billion) and Just Eat Takeaway.com ($ 13 billion), two large European food delivery companies combined. European stocks generally lag behind US stocks. But another reason for investor caution has to do with food delivery. Strict labor laws, union-building traditions, expensive unskilled workers and stingy customers who buy little and rarely tip make Europe the hardest continent to do business.
Ostberg says high labor costs have become less of a concern in Europe because delivery efficiency has improved significantly in recent years. European consumers have also become less frugal amid the pandemic boom in online shopping of all kinds. As a consequence, Delivery Hero reversed its decision to leave the German market entirely, transferring its domestic businesses, Foodora, Lieferheld and Pizza.de, to Takeaway.com (a Dutch firm that later merged with Just Eat) to focus on fast-growing Asia. In the summer, the new Foodpanda app was launched in Berlin, Frankfurt, Hamburg and Munich.
However, when it comes to other labor issues, the situation can get even more complicated. If a draft proposal is under development in the European Union (The EU) becomes law, up to four million workers delivering food or transporting trucks can be promoted to the employee category. This would give them the right to minimum wages, sick leave and paid leave, unemployment benefits, health insurance and long-term medical care, and pension insurance contributions.
V The EU It is estimated that the reclassification could cost gig economy companies around 4.5 billion euros per year. Like his business colleagues, Mr. Ostberg insists that many of his riders choose to freelance because it allows them to work as much as they want, when they want. “More or less anyone can work with us at any time of the day,” he says. But from such arguments, there is less and less mustard. In February, a UK higher court ordered Uber (which has apps to deliver food and call passengers) to reclassify its London drivers as employees. Delivery Hero’s share price dropped nearly 3% on December 3 following news of the draft. The EU offer.
This development helps explain why couriers are becoming more assertive. Riders at Gorillas, a German online grocery store operating across Europe, have been arguing with management for months over working conditions and pay. In October, the firm fired hundreds of riders on strike, further fueling tensions. In late November, a German labor court rejected an attempt by management to prevent the Gorillas from electing their own works council, which they did. The firm’s management reluctantly had no choice but to say that they would work with workers’ representatives.
All of this is happening as competition intensifies in Germany. Delivery Hero will invest about € 120 million in sales and marketing in Germany in 2022, according to Jürgen Kolb of financial services company Kepler Cheuvreux. It now competes with Lieferando, which dominates the German market (and is owned by Just Eat Takeaway.com), Uber Eats, which launched in April, and Finnish firm Wolt, recently acquired by DoorDash for € 7 billion. DoorDash launched its own brand in Stuttgart last month. The next few years in German food delivery are likely to become a “dog dog”. Consumers can count on being well fed thanks to the giants. Their shareholders can go hungry. ■
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This article appeared in the Business section of the print edition under the heading How Can We Be Heroes?