Online delivery giant Just Eat‘s acquisition of rival Hungryhouse-worth up to £240 million- shows how a business acquisition can work.

Loss-making Hungryhouse last week announced that it would be closing its app on 22 May; meaning its familiar sign outside countless takeaways across the UK would disappear soon.

Why Just Eat ate up Hungryhouse

Swallowing up Hungryhouse means Just Eat can access a wider customer base and increase its market share and revenue. It also boosts its range of restaurants from 30,000 to around 40,000, in under a year, which is almost certainly quicker than developing new partners internally.

The Competition and Markets Authority  gave the deal the green light in October last year when it said strong competition from UberEats and Amazon meant it was fair for Just Eat to acquire its rival. ‘(UberEATS and Amazon) generally present a greater competitive challenge to Just Eat than Hungryhouse, and this is likely to grow as they expand,’ the CMA said.

Hungryhouse runs a similar business model to Just Eat – both take a percentage fee of around 12 per cent per app order from takeaway businesses that already offer delivery services themselves. Restaurants also can pay a fee to get their business at the top of the rankings.

Their revenue model differs from Deliveroo who offer a delivery service for restaurants who would normally not offer such a service. Deliveroo charge a commission to the restaurant when they complete an order and the customer a flat £2.50 fee. UberEats charge the restaurant a percentage of the order made plus a delivery fee to the courier.

Although consumers have expressed disappointment as Hungryhouse shuts its doors-its user interface and PayPal integration will be missed by some- it remains to be seen whether Just Eat will make any changes to its app after Hungryhouse closes.

The acquisition goes to show that even in an incredibly competitive online food delivery space, it is possible to continue growing your revenue, staff and market share.

Watch Hungryhouse’s 2007 investment pitch on Dragons Den here.

Three more acquisition deals that worked

• Amazon’s acquisition of Whole Foods in October 2017 sent Amazon’s share price rocketing. Its pledge that it would lower prices at Whole Foods, making the well-to-do shop affordable to more people has caught the imagination of investors and has sent rival supermarket shares tumbling.
• Disney buying Marvel for $4 billion has been a success. So far, Marvel films have been a hit worldwide and have already grossed $3.5 million with plenty more opportunities for TV series sales and merchandise down the line for Disney to come.
• Google’s purchase of little-known Android for $50 million in 2005 has turned it into the best known mobile operator in the world and it now powers 88 per cent of smartphones worldwide.

Further reading on acquisitions

What the Disney-Fox merger shows us about acquisitions in media