“In our view, the dark store model is the recipe for the long-awaited digitization of convenience stores, as well as being a business model with the prospect of attractive returns,” Jefferies analysts say.

Launch of new Hop from () grocery delivery service adds another potential “step change” to the company’s already “massive” advantage as a first mover, analysts at broker Jefferies say .

Deliveroo Hop will operate from delivery-only grocery stores offering groceries to consumers in as little as 10 minutes, the company said, with the service benefiting from “deep integration” between its newly developed grocery management technology. developed and the logistics algorithms of the company and its network of more than 50,000 delivery people across the UK.

The first Hop site went live last week in central London with a £ 10 first order promotion.

“In essence, it is Deliveroo that is replicating its success with the ‘dark’ model in restaurants,” analysts said, as they have been “at the forefront” of Deliveroo’s growth investment program. .

Although her dark kitchens were sharply criticized for robbing customers from independent restaurants the dark model in restaurants “works,” says Jefferies as it enables Deliveroo “to increase the utility of its market to restaurants and consumers by bringing new cuisine to a neighborhood with low operating costs and costs. ‘scalable investment’.

In July, Deliveroo first said it would use its advantage in the grocery store to bring the “dark” model to its supermarket partners.

“Deliveroo has turned their talk to action by founding a model that responds to their long-held views on the risks / benefits of working with a supermarket partner (better supply chain; better inbound logistics; better brand awareness) by compared to operating a proprietary dark store (faster; real-time inventory; better economy), ”analysts said.

As with its dark restaurants, Hop is a real physical space that Deliveroo will seek out, rent, develop and use in order to accommodate partners, in this case supermarkets.

The partner supermarkets will wholesale the groceries – under their own brands – on the Deliveroo marketplace.

“It’s a model that extracts the best from the partnership model and the dark store model while denying their weaknesses,” the Jefferies team said.

“In our view, the dark store model is the recipe for the long-awaited digitization of the convenience store, while also being a business model with attractive return prospects (especially for platforms that have several structural advantages. compared to a pure game). For us. , Deliveroo was the operator every inch for a premium note, except for its lack of exposure to dark stores. With Hop, this gap has now closed. “

After that, you won’t be surprised to learn that Jefferies rates Deliveroo as a ‘buy’, a rating that was reiterated with a price target of 435p.

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