Food delivery stocks are slipping in Europe — here’s why

A food delivery courier working for Just Eat in London.

Simon Dawson | Bloomberg | Getty Images

LONDON – Europe’s food delivery firms are seeing their share prices fall as investors start to consider life after the coronavirus pandemic.

Just Eat Takeaway and Ocado were among the biggest losers on the London Stock Exchange Tuesday, down 1.1% and 1.7% respectively by lunchtime. Meanwhile, in Germany, Delivery Hero sank 0.9% and HelloFresh was trading 3.4% lower on the Frankfurt Borse.

The daily moves aren’t massive, but shares in the sector have been falling gradually over the last few weeks as economies start to open back up. Shares in Just Eat Takeaway have fallen by around a third since their October high and Delivery Hero has fallen by around 17% since its peak in January.

“Easter provided a tiny taste of the old normal for many people and reawakened old appetites,” Danni Hewson, a financial analyst at AJ Bell, told CNBC.

“The prospect of dining and drinking out is giving a boost to businesses like Wagamama owner the Restaurant Group and pub chain Wetherspoons,” said Hewson. “By contrast lockdown winners like Ocado to Hello Fresh are seeing shares tumble.”

Britain’s pubs and restaurants are set to open once again on April 12, albeit outdoors only. Other parts of Europe have implemented new lockdowns, however, as their vaccination programs lag and a third wave of the coronavirus threatens to take hold.

Hewson believes that the long-term impact on food delivery platforms probably won’t be catastrophic, adding that the initial novelty of being able to eat and drink away from home may soon fade. And it might not be that easy to get a reservation either.  

“There will be a limit to how many of us can get our hands on a coveted al-fresco table,” she said. “There will still be many customers who prefer to wait for those much-discussed vaccine passports before venturing out.”

“What we are seeing today is markets waking up to the knowledge that last year’s huge growth for these sectors can’t be sustained. Demand will still be there but a cooling off is inevitable,” she added.

Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said the U.K. government’s announcement Monday that it was on track to re-open the economy fully may be contributing to the fresh declines in some online food delivery firm’s share prices.

She agreed that the “insatiable demand” for takeout food isn’t likely to fully unravel, but believes, “there is inevitably going to be some drop in demand” among some customers as restrictions ease.

As infection numbers fall, many shoppers will also “return to old habits” and start shopping at physical supermarkets again, said Streeter.

“However, other customers will have had the first taste of the ease and efficiency of online ordering during the pandemic, and are likely to keep filling digital baskets, particularly as the novelty of queuing at checkouts once again wears off,” she said.

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