Yum China to acquire PE-backed delivery firm Daojia
Yum China Holdings, which operates KFC, Pizza Hut and Taco Bell in the country, has agreed to buy Daojia, a local online food-ordering platform backed by several private equity investors.
The size of the deal was not disclosed. Daojia’s most recent third-party investment came in late 2014, when domestic online retailer JD.com and Macquarie Capital led a Series D round worth $50 million. It previously received capital from the likes of Northern Light Venture Capital and CDH Investments.
The company was founded in 2010 but it also operates Sherpa’s, which started operating in Shanghai as early as 1999, primarily focusing on the expatriate community. Daojia concentrates on higher-end orders in large cities such as Beijing, Shanghai, Guangzhou and Shenzhen, taking a commission on each transaction.
At the time of the Series D round, the company had a presence in eight cities and claimed to have nearly one million users, more than 3,000 restaurant partners, and 1,000 delivery staff nationwide. Its restaurant partners included South Beauty, Tous Les Jours and Haagen-Dazs.
“Digital and delivery are long-term strategic drivers of our business, and I am pleased to build on our technological know-how and capabilities in this high growth area," Micky Pant, CEO of Yum China, said in a statement. The company has one of the largest restaurant delivery networks in China, with over 4,400 of its 7,663 restaurants offering delivery services as of March. Delivery contributed about 12% of total sales.
Daojia is one of a host of Chinese food-ordering platforms that have received private equity and venture capital backing in the last few years. However, the market appears to be consolidating. Independent players with substantial scale and resources are taking a larger share, alongside platforms that operate as – subsidized – subsidiaries of larger internet companies.
Last year Ele.me, the leading independent operator, secured $1.25 billion in funding from Alibaba Group and its online finance affiliate Ant Financial Services Group, taking the total raised by the company since inception to more than $2 billion. Online-to-offline services platform Meituan-Dianping also has a food delivery vertical, as do Baidu Delivery and Alibaba’s Koubei.
JD.com also had its own delivery platform, JD Daojia, which primarily focused on food. Last year it merged with Dada Nexus, a crowdsourced delivery platform backed by Sequoia Capital and DST Global, and formed New Dada. Walmart subsequently made a $50 million strategic investment in the business.
The Yum China operation, previously wholly-owned by US-headquartered Yum Brands, was spun out into a separate listing last October. Primavera Capital and Ant Financial both invested in the new business ahead of the listing.
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