Food Delivery Drive is Disrupting Food Service BusinessesAug23

Daily Intelligence Briefing

Tuesday, August 20, 2019

Food Delivery

Food Delivery Apps Are In A Race For Orders, Putting Uber And Grubhub Stock On Defensive

A flood of capital is dishing up billions of dollars to the ravenous crowd of food delivery apps, a hotly competitive group dominated by four upstart companies that include Grubhub (GRUB) and Uber (UBER). But the extra portions aren’t giving Uber or Grubhub stock a lock on the market.

Grubhub and Uber Eats, as well as privately held DoorDash and Postmates, show an insatiable hunger for bigger turf to stay ahead of the pack. They’re experimenting with self-driving cars, robots and drones — anything to get the lion’s share of the business.

As a sign of the growing competition, Grubhub stock recently dropped 12% in reaction to its second-quarter earnings report. Revenue of $325 million beat estimates but adjusted earnings missed views as Grubhub now expects lower profit in 2019.

“Competition from deep-pocketed players is the biggest headwind facing Grubhub,” wrote Brent Thill, an analyst at Jefferies, after the Grubhub earnings report on July 30. “We continue to warm up to the story longer term given our view that the industry is large enough to support multiple winners, but short term we see continued competitive headwinds.”

These four market leaders control roughly 80% of the food delivery service business. But the food fight is far from over. Dozens of smaller companies hope to stake their claim and capture some of the billions of dollars in venture capital now there for the taking.

Read the full article from Investor’s Business Daily +

Food Delivery

Here’s why Uber won’t worry about the planned merger between Takeaway.com and Just Eat

Takeaway.com and Just Eat have agreed to merge in a bid to create a global food-delivery champion. Uber won’t be too worried about the deal’s impact on Uber Eats, its rival service.

Combined orders at Netherlands-based Takeaway.com and UK-based Just Eat rose by about a third to 355 million in 2018, generating 7.3 billion euros ($8.2 billion) in gross bookings. The pair’s cut of that amounted to roughly $1.2 billion in revenue, according to their full-year earnings. Uber doesn’t disclose the number of Uber Eats orders it processes. However, based on the representative order size of $18 shown in its IPO filing, the company’s $7.9 billion in gross bookings suggest it received around 439 million orders last year.

Uber Eats appears to be roughly the same size as Takeaway.com and Just Eat combined, although it’s growing much faster. Uber Eats revenue surged nearly 150% to almost $1.5 billion last year, although that falls to $759 million if you subtract driver referrals and certain incentives. Its revenue grew by 89% to $536 million in the first quarter, while Just Eat’s revenue rose 28% and Takeaway.com’s revenue jumped 70%, boosted by its acquisition of Delivery Hero in Germany.

Given Uber Eats’ greater scale and reach, faster growth, and larger cash pile, it shouldn’t be too concerned by Just Eat and Takeaway.com joining forces. A greater threat could be Deliveroo, which has raised over $1.5 billion in financing from Amazon and other high-profile investors.

Read the full article from Business Insider +

Food Delivery

Just Eat-Takeaway.com $6 Billion Deal May Order Up an M&A Spree

The boards of Just Eat Plc and Takeaway.com NV agreed on terms of an all-share 5 billion-pound ($6 billion) combination that pits two food-delivery incumbents against a clutch of well-backed startups. The new company, Just Eat Takeaway.com NV, is betting that its combined experience in turning a profit will help convince shareholders that it can fight off sizable rival startups that may also join forces.

“There is only a limited number of listed companies and ample funding for private companies,” said Takeaway.com Chief Executive Officer Jitse Groen in a call with reporters. “However, it is a logical way forward that the companies that are going to be the biggest will acquire further businesses.”

The food-delivery industry in Europe has become a battleground, with rivals competing on price and copying one another’s business models. Joining forces with Takeaway.com will mark something of an escape for Just Eat, which has stuttered in the face of pressure from rivals and an activist shareholder. Once the dominant player in the food-delivery market in the U.K., its shares have fallen amid growing competition from Uber Eats and Deliveroo, and the company is without a permanent CEO after the departure of Peter Plumb in January.

The two boards have agreed on the deal, first revealed in late July, according to a statement Monday. Just Eat Shareholders will own 52.15% of the combined entity, and Takeaway.com holders will have 47.85%.

Read the full article from Bloomberg +

Food Delivery

The Rise of the Virtual Restaurant

Food delivery apps like Uber Eats, DoorDash and Grubhub are starting to reshape the $863 billion American restaurant industry. As more people order food to eat at home, and as delivery becomes faster and more convenient, the apps are changing the very essence of what it means to operate a restaurant.

No longer must restaurateurs rent space for a dining room. All they need is a kitchen — or even just part of one. Then they can hang a shingle inside a meal-delivery app and market their food to the app’s customers, without the hassle and expense of hiring waiters or paying for furniture and tablecloths. Diners who order from the apps may have no idea that the restaurant doesn’t physically exist.

“Online ordering is not a necessary evil. It’s the most exciting opportunity in the restaurant industry today,” said Alex Canter, who runs Canter’s Deli in Los Angeles and a start-up that helps restaurants streamline delivery app orders onto one device. “If you don’t use delivery apps, you don’t exist.”

Yet even as delivery apps create new kinds of restaurants, they are hurting some traditional establishments, which already contend with high operating expenses and brutal competition. Restaurants that use delivery apps like Uber Eats and Grubhub pay commissions of 15 percent to as much as 30 percent on every order. While digital establishments save on overhead, small independent eateries with narrow profit margins can ill afford those fees.

Read the full article from New York Times +

SHORT

Airlines

LONG

CRISPR

LONG

Robotics & Automation

LONG

Solar

LONG

Vietnam

SHORT

Autos

LONG

Electric Utilities

LONG

Silver

SHORT

U.S. Pharmaceuticals

LONG

3D Printing

US Stocks Close Higher on Stimulus Measures Hopes

Wall Street finished sharply higher on Monday and Treasury yields rebounded as concerns regarding an economic recession eased amid stimulus measures expectations from major central banks. Also, the US Commerce Department announced it will extend another 90-day reprieve given to Chinese telecoms Huawei Technologies lifting investors’ sentiment. The Dow Jones increased 250 points, or 1% to 26,136, the S&P rose 35 points, or 1.2% to 2,924; and the Nasdaq went up 107 points, or 1.4% to 8,003.

Click here to access the data +

Europeans Shares Open Mixed on Stimulus Hopes

European stocks opened mixed on Tuesday, amid expectations of monetary policy stimulus from major central banks. Food and beverages shares were among the best performers after the opening bell while basic resources among the worst performers. The FTSE 100 rose 0.2%; the DAX 30 increased 0.1%; and the CAC 40 advanced 0.1%; while the IBEX 35 went down 0.3% and the FTSE MIB lost 0.2% around 08:20 AM London time.

Click here to access the data +

Gold Trades Near $1500

Gold prices were down more than 1.2% to $1505.7 an ounce around 05:10 PM New York time on Monday, amid a stronger dollar and a recovery in equities supported by accommodative monetary policy by global central banks.

Click here to access the data +

Oil Rises on Middle East Tensions

Oil prices went up on Monday after a Saudi oil facility was targeted in a drone attack by Yemen’s Houthi group on Saturday. Still, the gains were curbed by OPEC’s forecast that world demand for its crude would decline next year and the lack of progress regarding the trade dispute between the world´s two biggest economies. US crude oil rose as much as 2.4% to $56.17 per barrel while Brent crude added nearly 1.9% to $59.78 per barrel around 05:10 PM New York time.

Click here to access the data +

Economics & Trade

Japan

Exports in free fall as US-China trade war jolts Japan’s economy

Japan’s exports slipped for an eight month in July, while manufacturers’ confidence turned negative for the first time in over six years as slowing global growth and the prolonged China-US trade war took a toll on the world’s third-biggest economy. The gloomy data adds to the challenge for Japanese policymakers worried that a prolonged downturn in external demand will drive a sharp economic downturn at home.

Exports in July fell 1.6 per cent from a year earlier, Ministry of Finance data showed on Monday, dragged down by car parts and semiconductor production equipment. That compared with a 2.2 per cent decrease expected by economists.

Separately, the Reuters Tankan survey showed Japanese manufacturers’ business confidence turned negative for the first time since April 2013 in August, underlining the darkening outlook for the export-reliant economy.

Anxiety about a global slump rose to fever pitch recently after an inversion in the US Treasury yield curve implied a growing risk of a recession there, and data showed Germany’s economy was in contraction and China’s was worsening. Export-reliant economies such as Japan have been hit hard by the Sino-US tariff row, which has already upended supply chains and undermined global trade, investment and corporate earnings.

Read the full article from South China Morning Post +

Finance

China

The Chinese central bank just effectively made a rate cut, analysts say

China’s central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies and support a slowing economy that has been hurt by a trade war with the United States. The People’s Bank of China (PBOC) said it will improve the mechanism used to establish the loan prime rate (LPR) from this month, in a move to further lower real interest rates for companies as part of broader market reforms.

Analysts say the move, which came after data that showed weaker than expected growth in July and followed a cabinet announcement on Friday, underscores the government’s attempts to use reforms to support a slowing economy.

“By reforming and improving the formation mechanism of LPR, we will be able to use market-based reform methods to help lower real lending rates,” the PBOC said in a statement published on its website. The central bank will “deepen market-based interest rate reform, improve the efficiency of interest rate transmission, and lower financing costs of the real economy,” it said.

Chinese banks’ new LPR quotations will be based on rates of open market operations, and the national interbank funding center will be authorised to publish the rate from Aug. 20, the PBOC said. It added the rate will be published every month on the 20th, effective this month.

Read the full article from CNBC +

Construction & Real Estate

FinTech

Real Estate Investing Has Finally Evolved Thanks to This Innovative Peer-to-Peer Platform

PeerStreet was founded in 2013 with the backing of several prominent venture capital firms. In 2017 it was named the Best Peer-to-Peer Lending Platform by the fintech Breakthrough Awards. Today it might be doing more to disrupt the traditional world of real estate investing than anyone else.

PeerStreet is an online marketplace for real estate backed loans. It’s crowdfunding for mortgages that breaks standard loans up into smaller pieces so individuals can become microlenders. In this way PeerStreet connects investors with borrowers in a way never before possible. Investors get to earn 10% or more on their investments, and borrowers get the money they need to buy a house or run a business.

The entire process is guided by high-tech data analytics. PeerStreet shops for real estate debt from reputable private lenders from across the United States. They review each lender’s track record and run individual loans through their proprietary analytics engine, using advanced AI algorithms and data science to curate a pool of safe, high-quality real estate debt investments. PeerStreet then sells pieces of these loans to its investors.

Unfortunately, because peer-to-peer investing is relatively new, right now the PeerStreet platform is only available to accredited investors. According to current SEC regulation, “accredited investors” are individuals with a net worth greater than $1 million or an annual income greater than $200,000.

Read the full article from Futurism +

Housing

Houses are the new Instagram influencers — so it’s a shame most millennials in the US will likely be renters for years

Instagram influencers can forget the #OOTD (outfit of the day) — fashion is no longer the only way to build a cash-inducing Insta following. Enter the home-décor influencer, who has found a way to turn their home into a “money-making social media star,” as Ronda Kaysen reported for The New York Times.

Those who have found a way to build a following and engagement generate money through affiliate commissions, sponsored ads, and merchandise promotions, according to Kaysen. Earnings are unknown, but an influencer with 100,000 followers can earn $1,000 per post, she said, citing Instagram platform Later. The irony here is that many of the average home-décor influencer’s generational peers are likely to be renters for years.

Thanks to an increasingly expensive housing market, millennials are renting longer and buying later. First-time homebuyers today are likely to pay 39% more than first-time homebuyers did nearly 40 years ago, according to Student Loan Hero. A report by SmartAsset found that in some cities, the median home outweighed the median income by so much that it could take nearly a decade to save for a 20% down payment.

So, while some millennials are churning a profit off their big houses, others don’t even have enough money for a starter home.

Read the full article from Business Insider +

Labor, Education & Demographics

Robotics & Automation

Machines Replace a Third of Workforce at Giant Copper Mine

Machines are taking over a giant Chilean copper mine, replacing about a third of the workforce as owner Codelco struggles to keep its title as the world’s largest producer of the metal.

Codelco officially inaugurated underground operations at its century-old Chuquicamata mine on Wednesday. The $5.5 billion project is the first of the state company’s multi-billion dollar effort to upgrade mining activities in order to boost productivity. The miner’s output fell to 1.68 million tons last year, from 1.73 million a year earlier as its higher-grade ore reserves decline.

About 1,700 jobs will be cut at the Chuquicamata project as operations shift to underground mining, from open pit. The switch is necessary as the state-run company aims to access higher grade ore through tunnels underneath the pit to avoid a production slump in the coming years.

“Reforms have never been painless, but we must do them,” Codelco Chief Executive Officer Nelson Pizarro said in a speech during the inauguration. “Digital transformation is our ally, the only thing that can help us satisfy environmental requirements, lower costs and empathize with communities.”

Read the full article from Bloomberg +

Robotics & Automation

What really helped Walmart clean up with earnings — robot ‘associates’

Analysts say that Walmart Inc.’s second-quarter results show that each part of the business is putting in the necessary work to achieve growth, even its robot floor cleaners. Swapping the mops for knowledgeable human interaction with customers is a key part of the changes at the retailer as it competes with online sellers using its own store-and-digital mix.

Walmart reported second-quarter earnings that beat expectations and a 37% increase in e-commerce sales. Revenue of $129.39 billion, however, was below the FactSet consensus. Even with the sales miss, at least six research analyst groups upped their price target for Walmart shares.

“In 2Q, Walmart U.S. was going up against its toughest same-store sales compare in 10 years. Still, it was able to generate 2.8% core same-store sales as it dialed up price investments,” wrote UBS in a note. “Plus, it continues to find new ways to control expenses as it learns from [zero-based budgeting] and increases its use of automation (e.g. FAST unloaders, robot floor cleaners).”

UBS rates Walmart stock neutral with a $115 price target, up from $107.

Read the full article from MarketWatch +

Services

Food Delivery

Food Delivery Apps Are In A Race For Orders, Putting Uber And Grubhub Stock On Defensive

A flood of capital is dishing up billions of dollars to the ravenous crowd of food delivery apps, a hotly competitive group dominated by four upstart companies that include Grubhub (GRUB) and Uber (UBER). But the extra portions aren’t giving Uber or Grubhub stock a lock on the market.

Grubhub and Uber Eats, as well as privately held DoorDash and Postmates, show an insatiable hunger for bigger turf to stay ahead of the pack. They’re experimenting with self-driving cars, robots and drones — anything to get the lion’s share of the business.

As a sign of the growing competition, Grubhub stock recently dropped 12% in reaction to its second-quarter earnings report. Revenue of $325 million beat estimates but adjusted earnings missed views as Grubhub now expects lower profit in 2019.

“Competition from deep-pocketed players is the biggest headwind facing Grubhub,” wrote Brent Thill, an analyst at Jefferies, after the Grubhub earnings report on July 30. “We continue to warm up to the story longer term given our view that the industry is large enough to support multiple winners, but short term we see continued competitive headwinds.”

These four market leaders control roughly 80% of the food delivery service business. But the food fight is far from over. Dozens of smaller companies hope to stake their claim and capture some of the billions of dollars in venture capital now there for the taking.

Read the full article from Investor’s Business Daily +

Food Delivery

Here’s why Uber won’t worry about the planned merger between Takeaway.com and Just Eat

Takeaway.com and Just Eat have agreed to merge in a bid to create a global food-delivery champion. Uber won’t be too worried about the deal’s impact on Uber Eats, its rival service.

Combined orders at Netherlands-based Takeaway.com and UK-based Just Eat rose by about a third to 355 million in 2018, generating 7.3 billion euros ($8.2 billion) in gross bookings. The pair’s cut of that amounted to roughly $1.2 billion in revenue, according to their full-year earnings. Uber doesn’t disclose the number of Uber Eats orders it processes. However, based on the representative order size of $18 shown in its IPO filing, the company’s $7.9 billion in gross bookings suggest it received around 439 million orders last year.

Uber Eats appears to be roughly the same size as Takeaway.com and Just Eat combined, although it’s growing much faster. Uber Eats revenue surged nearly 150% to almost $1.5 billion last year, although that falls to $759 million if you subtract driver referrals and certain incentives. Its revenue grew by 89% to $536 million in the first quarter, while Just Eat’s revenue rose 28% and Takeaway.com’s revenue jumped 70%, boosted by its acquisition of Delivery Hero in Germany.

Given Uber Eats’ greater scale and reach, faster growth, and larger cash pile, it shouldn’t be too concerned by Just Eat and Takeaway.com joining forces. A greater threat could be Deliveroo, which has raised over $1.5 billion in financing from Amazon and other high-profile investors.

Read the full article from Business Insider +

Food Delivery

Just Eat-Takeaway.com $6 Billion Deal May Order Up an M&A Spree

The boards of Just Eat Plc and Takeaway.com NV agreed on terms of an all-share 5 billion-pound ($6 billion) combination that pits two food-delivery incumbents against a clutch of well-backed startups. The new company, Just Eat Takeaway.com NV, is betting that its combined experience in turning a profit will help convince shareholders that it can fight off sizable rival startups that may also join forces.

“There is only a limited number of listed companies and ample funding for private companies,” said Takeaway.com Chief Executive Officer Jitse Groen in a call with reporters. “However, it is a logical way forward that the companies that are going to be the biggest will acquire further businesses.”

The food-delivery industry in Europe has become a battleground, with rivals competing on price and copying one another’s business models. Joining forces with Takeaway.com will mark something of an escape for Just Eat, which has stuttered in the face of pressure from rivals and an activist shareholder. Once the dominant player in the food-delivery market in the U.K., its shares have fallen amid growing competition from Uber Eats and Deliveroo, and the company is without a permanent CEO after the departure of Peter Plumb in January.

The two boards have agreed on the deal, first revealed in late July, according to a statement Monday. Just Eat Shareholders will own 52.15% of the combined entity, and Takeaway.com holders will have 47.85%.

Read the full article from Bloomberg +

Food Delivery

The Rise of the Virtual Restaurant

Food delivery apps like Uber Eats, DoorDash and Grubhub are starting to reshape the $863 billion American restaurant industry. As more people order food to eat at home, and as delivery becomes faster and more convenient, the apps are changing the very essence of what it means to operate a restaurant.

No longer must restaurateurs rent space for a dining room. All they need is a kitchen — or even just part of one. Then they can hang a shingle inside a meal-delivery app and market their food to the app’s customers, without the hassle and expense of hiring waiters or paying for furniture and tablecloths. Diners who order from the apps may have no idea that the restaurant doesn’t physically exist.

“Online ordering is not a necessary evil. It’s the most exciting opportunity in the restaurant industry today,” said Alex Canter, who runs Canter’s Deli in Los Angeles and a start-up that helps restaurants streamline delivery app orders onto one device. “If you don’t use delivery apps, you don’t exist.”

Yet even as delivery apps create new kinds of restaurants, they are hurting some traditional establishments, which already contend with high operating expenses and brutal competition. Restaurants that use delivery apps like Uber Eats and Grubhub pay commissions of 15 percent to as much as 30 percent on every order. While digital establishments save on overhead, small independent eateries with narrow profit margins can ill afford those fees.

Read the full article from New York Times +

Cannabis

The $4 billion time bomb ticking away inside the biggest marijuana companies

As pot-stock mania gripped North America in 2018, a bidding war struck up for a relatively small marijuana-growing property in a Toronto suburb. The 9,000-square-foot facility was only capable of growing about C$12 million ($9 million) worth of pot in a year, but that didn’t seem to matter.

Marijuana companies were surging in interest and market cap as Canada planned to legalize recreational pot sales, and companies that established at least one cultivation license were receiving beneficial treatment from Health Canada, which meant snagging the property and its accompanying license could lead to a legitimate growing business in more ways than one.

RavenQuest BioMed Inc. eventually “won” the bidding, agreeing to pay nearly C$30 million. But after Health Canada stopped expediting requests from license holders, RavenQuest was unable to capitalize on its purchase in the way it had thought. At the time, the company had a recorded value of C$27.7 million, or roughly C$1,385 per square foot, on its books, well more than the going rate for such facilities. Months later, RavenQuest recorded a C$11.7 million impairment charge for the license at the end of the company’s fiscal year — a loss that was nearly 20 times more than its most recent quarterly revenue.

At the premier pot companies, the losses could be much larger and more important. Similar acquisitions played out across the cannabis industry, and the claimed value of those purchases now sits on cannabis companies’ books like a ticking time bomb. The six largest licensed cannabis producers in Canada have recorded more than $4 billion in goodwill — the amount allocated to certain acquisitions beyond the value of their physical assets — risking large and potentially punishing write-downs in the future.

Read the full article from MarketWatch +

Manufacturing & Logistics

3DP

3-D Printing and the Race for Space

In 2018, the space sector grew to an incredible $3.25 billion industry. A number of different technologies are driving this rapid growth, but the most promising one is industrial-grade 3D metal printing (a.k.a. metal additive manufacturing). Once met with skepticism, 3D metal printing has proven itself to be a cost-effective and efficient way to develop production-ready parts, making it the new darling of the commercial race to space.

Traditional manufacturing often restricts engineers when designing complex hardware units. With the help of metal additive manufacturing, engineers are able to design and produce hardware that’s made to meet the challenges of outer space, with quicker iterations and faster product development.

In recent years, additive manufacturing has begun making tangible, validated strides in aerospace. For example, 3D metal printing was recently selected to manufacture flight hardware for Boom Supersonic’s XB-1, a jet that will allow travel at 1,687 miles per hour. Metal additive manufacturing allowed Boom to produce the necessary parts efficiently, with increased precision and freedom of design.

The ultimate goal of metal 3D printing in this industry is to expedite the development of the sophisticated technology that is necessary for this new wave of commercial space exploration. By ensuring that parts are made efficiently, without requiring excess rounds of prototyping, engineers can develop high-quality parts much faster, leading to greater opportunity in space.

Read the full article from Scientific American +

Transportation

Airlines

Airlines are selling thousands of flights on the Boeing 737 Max, even though it’s still grounded

Airlines including American, United, Southwest, Norwegian, and TUI are selling thousands of flights in November and December of this year using the plane, the UK’s The Sunday Times newspaper reported. These flights are just after when the airlines think that the plane will be allowed to fly again — a date that the airlines keep pushing back.

The US Federal Aviation Administration and its equivalent regulators around the world have not given a timeline for when the plane will return to the air. As a result, airlines are continually delaying flights involving the plane, some until the start of 2020, as its return is pushed back later than the industry had expected.

According to The Sunday Times, reporting data from UK travel intelligence firm OAG Aviation, around 17,512 flights have been booked with the planes for November, and 15,114 in December.

Stephen Dickson, the head of the FAA, said in August that it is not imposing a timeline for the plane’s return, and will only let it fly once Boeing’s changes to the plane have been approved.

Read the full article from Business Insider +