The Deliveroo vs Just Eat food fight has only just begun

Alys Key
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Deliveroo took aim at Just Eat with its latest update (Source: Getty)

In the City, you never know when you might be someone else's breakfast. Firms are hungry for market share, and a competitive edge is the dish of choice. Just Eat's shares plunged yesterday after Deliveroo announced an expansion of its platform which saw it square up to the FTSE 100 giant.

For the first time, restaurants which do their own delivery can list on Deliveroo. In other words, Deliveroo will offer a marketplace as well as a logistics solution.

One can't help but read this as a response to Just Eat's decision to muscle in on the logistics side of food delivery. When the company announced in March that it would invest £50m in developing its own network of delivery riders, its shares plunged. Why? Because without first mover advantage, entering that part of the market was a big change and a massive gamble for the company.

Whether that move directly prompted Deliveroo to stake its own claim on Just Eat's patch is unclear. What we do know is that Just Eat has a lot on its plate if it wants to maintain its Michelin status.

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Deliveroo does not reveal its commission rates, but City A.M. understands that the plan is to offer this new service as competitively as possible.

While the company says it mostly expects to attract restaurants which don't yet use an online platform at all, there will inevitably be some shifting across from Just Eat. Just Eat will need to consider whether it is giving restaurants good value for money, especially at a time when the industry is facing rising costs.

Just Eat should also recognise, now more than ever, what differentiates it from Deliveroo: its size. Thanks in large part to its acquisition strategy, the company has over 28,000 restaurants on the platform, compared to 10,000 for Deliveroo. It will need to leverage this national status before its ambitious rival takes a larger bite out of the market.

There is a lot at stake here. A report by Barclays out today suggests the hospitality industry could make an extra £6.8bn a year by having more on-demand services. Food delivery is a crucial part of that, so it is no wonder these companies are jostling for prime position.The winner of this food fight will be the operator which makes the most compelling case to both restaurants and food fans.

Read more: Just Eat has enlisted this Dragon's Den star to mentor restaurants

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