Leila Abboud is a former Bloomberg Gadfly columnist.

If you were to give it a Yelp rating,'s pending initial public offering deserves about three stars out of five.

On the plus side, the Amsterdam-based food delivery service is growing revenue quickly and has a proven business model. Its domestic operation is already profitable because of its undisputed market leadership.

But unlike its biggest listed peers, Britain's Just Eat and U.S.-based GrubHub, which were profitable when they went public in April 2014, remains loss-making. That's down to brutal competition in Germany, where it's facing off with Rocket Internet's Delivery Hero. The tussle between the two meant's marketing expenses in Germany almost tripled to 37.2 million euros last year, while German Ebitda losses almost doubled to 28.5 million euros. That wiped out all the Dutch earnings.

On the Menu
Since their IPOs, Just Eat has outperformed U.S. peer GrubHub
Source: Bloomberg

Valuing the Netherlands business should be relatively straightforward since it's in a similar leadership position to Just Eat in Britain. Just Eat's enterprise value is about 22 times next year's estimated Ebitda, according to Bloomberg data. Obviously this is a very rough assessment, but if you applied a similar multiple to's Dutch first-half earnings this year (assuming that's matched in the second half), you'd get to about 700 million euros of enterprise value.

At the Table is growing sales rapidly, but remains unprofitable because of competition in Germany. Ebitda losses there are widening, though the group aims to be profitable within three years.
Source: IPO prospectus
Other includes Belgium, Austria, Poland, France, Luxembourg, Portugal, Switzerland, and discontinued operation in UK

Yet comparisons with Germany are harder, given the losses and the fact that competition there is still in flux. So the challenge is convincing investors about how that battle's going to play out. So far's segment -- lots of pizza and kebabs with restaurants doing their own delivery -- is proving to be a winner-takes-all type of market. Case in point: Just Eat appears to have cornered this part of the U.K.

If that dynamic repeats itself in Germany, then either Delivery Hero will prevail over, or the reverse, with the loser selling to the winner. Or Germany will prove the exception, and the two companies can co-exist profitably. In any case, bankers reckon the German market is worth about 1 billion euro in enterprise value. Investors have to decide how much of that pie deserves now, given little disclosure from Delivery Hero. The prospectus set an indicative price range of 20.50 euros to 26.50 euros, implying a market capitalization between 904 million euros and 1.12 billion euros depending on how many shares are sold.

Heating Up's marketing costs are increasingly rapidly in Germany in particular
Source: IPO prospectus
Other includes Belgium, Austria, Poland, France, Luxembourg, Portugal, Switzerland, and discontinued operation in UK

Like Just Eat and GrubHub, must also keep a wary eye on web giants Amazon and Uber. While the pair aren't yet doing restaurant delivery in the Netherlands or Germany, they've launched in London and Paris as well as U.S. cities. Amazon and Uber use their logistics know-how to provide services to higher-end restaurants that don't use their own scooters to do deliveries. It's a more expensive operating model than and Just Eat, though the new U.S. arrivals could swallow the costs pretty easily.

At the cheaper end of the market, Just Eat is sticking to its asset-light strategy and saying it doesn't need to move into logistics, an assertion that's been backed by investors who've pushed the company's shares up 44 percent in a year. Interestingly, though, is experimenting by hiring some delivery guys too. Although it's an extra cost, it's smart for the company to try out new recipes.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Leila Abboud in Paris at

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James Boxell at