14th April 2020

Online food delivery - UBS Evidence Lab inside: What does the data say about restaurant supply? (Hubert Jeaneau, CFA) Full Report

Fears in food delivery revolve around restaurant supply. Look inside for the latest UBS Evidence Lab data tracking Deliveroo.


Concerns around supply: we look at UBS Evidence Lab data on Deliveroo

Online food delivery is likely to be resilient in the context of the Covid-19 outbreak.

Demand signals are broadly positive, but risks are centered on restaurant supply (see

our recent note here: how resilient?). While lock-downs are leading some restaurants to

shut down operations temporarily (e.g. McDonald's, Greggs and Nandos in the UK),

online platforms are seeing record levels of sign-ups. What does the data tell us so far?

UBS Evidence Lab Deliveroo tracker shows that restaurant listings are up in March

month/month, with high levels of additions/removals. While we need to keep a close

eye on how those figures develop, we see this as a positive early signal.


Deliveroo restaurant inventory up in March; Spain most negatively impacted

Listings are up +2% MoM from Feb to March on Deliveroo, with +2k net restaurant

additions, below the average monthly net adds for the past 12m (at +3.5k). Deliveroo

inventory expanded in March in most European countries, including France, the UK and

Italy, with no large differences between tier one cities and the rest. The only exception

is Spain, where listings figures are down -4% MoM in March, mostly driven by Madrid

(-7%) and Valencia (-5%). Outside of Europe, Hong Kong and Singapore have seen

steady expansion over the past 3 months, while UAE figures were stable in March.


Early signals are positive, adoption set to increase

We see the online food delivery sector as likely to face near term headwinds from

supply constraints, however it should benefit from higher levels of adoption. That

Deliveroo is able to increase its offering given current Covid-19 disruptions in Europe is

a positive sign. Restaurants temporarily shut down should return on those platforms

while most of the recent sign-ups are likely to stay. It remains to be seen if prolonged

lockdowns translate into permanent restaurant closures which could still have negative

impacts medium term on industry growth.

We have Buy ratings on JET and DHER

We have Buy ratings on JET (£97/sh) and DHER (€94/sh): high quality structural growth

stories, resilient in the current environment, with benefits from increased adoption.

Subscribe to RoxStars

RoxStars is brought to you by Roxhill Media