Research: Talabat, MENA's biggest internet company
The first $10 billion tech firm of region?
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Over 25 years ago in Egypt, 29-year-old Ayman Rashed, unhappy with his job, and exploring business opportunities, landed on the idea of food ordering. He and his friends often ran into trouble ordering lunch at work—the only option was to call restaurants directly.
He knew it was a problem worth solving so he wanted to start working on it right away. Ayman convinced one of his friends, Mostafa Shoukry, to build it with him.
These were the dialup days so it seemed like an impossible task. The restaurants didn’t have internet. But Ayman and Mostafa hacked their way around everything.
They had someone build a website featuring menus and an option to place orders. It wasn’t integrated with any restaurant though. Whenever an order came through the site, a call center agent would manually call the restaurant to place the order on the customer’s behalf.
This is how the region’s first food-ordering website (or platform, if I may), Otlob, was born.
Just six months after launching, Otlob was acquired by ITworx, Egypt’s largest software development outsourcing company, in early 2000.
Two years later, ITworx sold Otlob to Linkdotnet, a major local ISP. It was one of the eight websites they acquired at the time. After a series of internal restructurings, the company ended up in the hands of A15, a fund created by the founders of Linkdotnet.
In 2015, A15 sold Otlob for a reported $12 million to Rocket Internet.
Then, in 2016, when Delivery Hero acquired Rocket Internet’s food delivery business, Otlob became part of Delivery Hero’s portfolio.
They seem to have taken good care of it since then, with Otlob not changing owners.
The brand, however, ceased to exist in September 2020 and was rebranded as Talabat.
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6alabat.com: The beginning
Five years after Otlob's launch, Khalid Alotaibi, a Kuwaiti student who had previously lived in Egypt was inspired to bring the concept to Kuwait, along with his three friends; Zaid Allhaib, Mohammed Alroumi, and Abdulwahab Al-Qatami.
Each put in 1,000 KWD (around $13,000 in total) to launch Talabat (known as 6alabat.com back then).
That was the start of Talabat’s long journey, and it wasn’t smooth at the beginning.
In early 2005, they went to Global Investment House, a private equity firm in the country, looking for funding. The senior management didn't bite. They didn’t think much of a food-ordering website. At the time, only one-fourth of Kuwait’s population was using the internet.
A 33-year-old junior analyst at the firm, Abdulaziz Al Loughani, however, saw the potential. Internet usage was nearly doubling every year thanks to smartphones like BlackBerry, and the platform was solving a real problem by cutting down phone orders and payment mix-ups.
He first approached his boss but faced resistance. His father was equally skeptical, uneasy about the idea of investing in a website. Even the firm’s chairwoman had her doubts.
Despite this, Abdulaziz remained resolute, stating he would move forward with or without their backing, even if that meant taking a loan to buy the company. In contrast to the others, the chairwoman offered her support, promising to step in if he couldn’t secure a loan.
Abdulaziz Al Loughani stepping in
In early 2007, with the loan secured and two co-investors on board, Abdulaziz acquired a 90 percent stake in Talabat, leaving 10 percent with co-founder Khalid Alotaibi. The deal valued the company at around $1 million post-money.
As CEO, Abdulaziz got to work. His previous attempt at launching an online pharmacy in Kuwait had failed, but the lessons learned proved invaluable. He increased spending on Google AdWords, sharpened Talabat’s SEO, and brought in a software engineer from Pakistan to upgrade the tech, laying the groundwork for growth.
At the time, Talabat was doing about 200 orders a day from 30 restaurants. They had five employees and were making around $10,000 monthly—barely enough to keep the lights on.
Just like Otlob, Talabat initially processed orders manually—first by phone, then via fax, followed by messages, and eventually by placing their laptops at restaurants for order management.
The team spent years making the website better, listening to both restaurant owners and customers. By 2009, things were looking up —they were making good money with 70 percent profit margins.
Talabat was one of the first businesses in Kuwait to roll out digital payments on its website. Back then, they were processing over 100 digital orders a day. Their annual order volume, including both cash and digital, at the time was around 700,000.
That year, they tried expanding to Saudi Arabia through a franchise model. This turned into a headache. The Saudi partner wasn't taking it seriously enough, but their agreement had locked Talabat out of Saudi Arabia—the biggest market in the Gulf. When they tried to end the deal, the Saudi partners wanted $1 million to walk away.
Mohammed Jaffar, the new owner
In 2010, Mohammed Jaffar, owner of The Kitchen, a casual dining restaurant and Talabat merchant, acquired 80 percent of Talabat for a reported $2 million. Half of the purchase price went toward buying out the Saudi franchise rights. I am not sure about the exact deal structure but Abdulaziz reportedly made four times his initial investment.
Following the sale, Abdulaziz went on to pursue a business graduate degree in venture capital and private equity, while maintaining a more hands-off role at Talabat.
With Mohammad Jaffar in charge and money from Faith Capital Holding (his family's investment firm), Talabat went on an expansion spree. It expanded its presence from Kuwait and Saudi to UAE, Bahrain, and Oman, in 2012. And to Qatar in 2013. Faith Capital put in $15 million to help Talabat spread across the GCC region.
Talabat’s mobile apps, for Android and iOS were launched in 2013. For almost nine years, the only channel that the business used for orders was its website.
Around the time Mohammad acquired Talabat, the leading Turkish food ordering platform Yemeksepeti entered the region with the launch of Foodonclick in the UAE. Over the next few years, it expanded to Saudi Arabia, Oman, Qatar, and Lebanon, reaching these markets by 2013.
Zomato, the Indian food ordering platform founded in 2008, also expanded to the UAE in 2012, making it its first international market.
Meanwhile, HungerStation launched in early 2012, becoming one of the first local food-ordering platforms in Saudi Arabia. Rocket Internet’s Hellofood also made its way into the region, starting in Morocco and then expanding to Saudi Arabia and Jordan by 2013.
By that year, Talabat was up against Foodonclick, Zomato, HungerStation, Hellofood, and Otlob in the UAE, Saudi Arabia, and other regional markets.
In 2014, it started receiving interest from different international players and investors who wanted to invest in or acquire the company. Faith Capital had invested $17 million in the company by then to expand it across the region and make it a leading player in the food ordering space.
Mohammad Jaffar —> Rocket Internet —> Delivery Hero
Towards the end of the year, they agreed to sell Talabat to Germany’s Rocket Internet for $170 million, making a 10x return on their investment. The German firm also acquired another UAE-only food ordering player 24h around the same time.
The Talabat deal was announced in February 2015. Just a month later, Rocket handed Talabat over to Delivery Hero, as part of another deal. At the time, Rocket Internet held a 30 percent stake in Delivery Hero. After transferring ownership of Talabat and purchasing $52 million worth of shares from existing Delivery Hero investors, Rocket increased its stake to 39 percent.
Niklas Östberg, CEO of Delivery Hero, at the time, said:
“The Middle East was always a missing piece to our global vision. Talabat built a fantastic business over the last years, making the most orders in the region. We will be instantly in a leading position in a region with tremendous growth potential.”
(In case you’re wondering, Mohammad Jaffar’s restaurant business is still thriving. Now led by his brother, Mubarak Jaffar, it has evolved into one of the region’s leading cloud kitchen companies, with over 100 virtual brands operating across the GCC. Mohammad serves as a board member).
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Talabat’s new home & Delivery Hero’s shopping spree
Abdulhamid Alomar, Chief Product Officer of Talabat at the time of its Rocket acquisition, became CEO after Delivery Hero took over. He joined Talabat in 2010, following its acquisition by Mohammad Jaffer, to oversee business development and product.
Right after acquiring Talabat, Delivery Hero went on to purchase Turkey’s Yemeksepeti for $589 million in May 2015. About eighteen months later, in December 2016, it acquired Rocket Internet’s entire food delivery business, Foodpanda.
At the time, Foodpanda operated in Saudi Arabia, Jordan, and Morocco through Hellofood. A year before the sale, in October 2015, Rocket had also acquired the Egyptian food ordering platform Otlob.
And in August 2016—just two months before selling to Delivery Hero—Rocket merged its Saudi operations with HungerStation, a leading local food ordering platform.
Yemeksepeti, meanwhile, had acquired a majority stake in the Jordanian food ordering startup ifood.jo and operated in the UAE, Saudi Arabia, Oman, Qatar, and Lebanon under the Foodonclick brand.
By the end of 2016, Delivery Hero had effectively acquired all the leading food ordering players in the Middle East and North Africa, either directly or indirectly.
(In September 2015, it also acquired Berlin-based Foodora, which had just begun its Gulf expansion, starting with a launch in Dubai.)
Delivery Hero also consolidated brands like Foodonclick, Hellofood, and 24h into Talabat, initially through operations and eventually by absorbing websites and apps.
Raining rivals
As Delivery Hero expanded rapidly through acquisitions, new international and local competitors kept entering the market. Deliveroo launched in UAE in 2015, and Uber Eats launched in Dubai in 2016, expanded to Saudi Arabia and Egypt in 2018 (but exited all Middle East markets by 2020). Jahez, founded in 2016 and launched in 2017, emerged as a Saudi rival. Meanwhile, Kuwait’s Carriage was preparing to shake things up in Kuwait.
Founded in March 2016 by Abdullah Al-Mutawa, Musab Al-Mutawa, Khaled AlQabandi, and Jonathan Lau, Carriage set itself apart by being the first in the region to offer delivery services with its in-house fleet, giving restaurants a complete end-to-end solution.
To do this, they purchased over 200 motorcycles and hired drivers directly on their payroll.
This allowed Carriage to support restaurants that had no delivery drivers or only a small team. Even restaurants with their fleets could use Carriage’s services during peak hours or to expand their delivery coverage.
While DoorDash had been offering a similar model in the United States since 2013, it operated as a three-sided marketplace, connecting customers, restaurants, and dashers (drivers). Carriage, on the other hand, managed its dedicated team of drivers.
Launched in May 2016, Carriage quickly gained momentum in Kuwait and expanded to the UAE and Bahrain within its first year. Delivery Hero had plans to go public by mid-2017. It couldn’t have risked losing one of its biggest markets in the world, Kuwait, to a year-old startup.
Just a year after Carriage’s launch, Delivery Hero announced its acquisition. Later that year, I reported—based on Delivery Hero’s disclosures—that the German firm paid around $100 million for Carriage. However, the deal included nearly an equal amount in performance-based earnouts, bringing the total to roughly $200 million.
100 million lifetime orders and the CEO’s departure
After this acquisition, Talabat launched its delivery service, becoming a three-sided marketplace, in 2017. In the same year, it also expanded to Jordan, absorbing ifood.jo’s operations and brand.
In 2018, Talabat hit 100 million lifetime orders. If my math is right, it is also the first year, Talabat hit $1 billion in annual GMV.
After its success in ride-hailing, Careem also entered the food delivery space by launching a dedicated food delivery app, Careem Now, in the UAE (Dubai) and Saudi (Jeddah) in late 2018. In the same year, the Spanish on-demand delivery startup Glovo, which is now owned by Delivery Hero, expanded to Egypt.
(Glovo was the most admired food delivery app in Egypt but it exited the market in 2020 to focus on profitability).
Abdulhamid Alomar, Talabat’s CEO, left the company in July 2019 after more than nine years with it, during which it evolved from a small food ordering service into a regional powerhouse with over a billion dollars in annual sales.
(Probably unrelated but just before this, Delivery Hero had fired the entire leadership team of HungerStation — which, by the way, is back in action and has emerged as a very serious rival to HungerStation’s grocery delivery business. It could also shake things up in grocery delivery in Talabat’s markets. I share a little more on this below and will soon do a subscriber-exclusive piece as well with further details).
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The new CEO and dark stores
Two months later, Delivery Hero appointed Tomaso Rodriguez as the new CEO of Talabat. Previously, he worked at Grab, where he launched and scaled the food delivery vertical to over 250 cities in Southeast Asia.
Before that, he held various roles at Uber, joining the firm in 2012 as a launcher in Europe, and then serving as General Manager for Italy and Greece. In 2015, he moved to Singapore to work on Uber Eats, launching it in 13 markets across Asia and Australia.
Due to Tomaso’s lack of experience in the Middle East, Delivery Hero’s decision was a somewhat risky bet—but it paid off remarkably well.
(Earlier this year, Delivery Hero acquired Zomato’s UAE business for $172 million. At the time of the deal, the Indian platform was processing 1.2 million orders monthly and generating $2 million in revenue per month in the Emirates).
Right after Tomaso’s appointment, Talabat expanded beyond food delivery, and launched the grocery and retail vertical, in the UAE, followed by other markets.
It contributes just over 21 percent of the company’s total GMV (as of 2023) and is growing significantly faster than the food delivery business.
In-house consolidation
In August 2019, a month before the new CEO took over, Delivery Hero shut down Carriage in Egypt. The move came just five months after launching Carriage in the same market, where they already operated under the Otlob brand. I still don’t understand the decision to launch Carriage in Egypt. The only possible explanation is that Otlob's reputation had suffered, and Delivery Hero wanted to test the waters with a fresh brand.
A few months after Carriage’s shutdown in Egypt, Delivery Hero folded its operations into Talabat, in all of its markets, including Saudi. It was early 2020. The apps stayed alive, but behind the scenes, they were running on Talabat’s backend. Slowly Carriage disappeared completely, replaced by Talabat.
What’s important to remember here is that Talabat had a limited presence in Saudi, and quietly exited the market at some point (for some strange reason, the Talabat website still has a Saudi page on it). Delivery Hero always directed most of its investment in Saudi toward HungerStation.
Later in 2020, in a nice bit of irony, Otlob—the platform that started it all—became Talabat as part of a rebranding exercise.
With the consolidation complete, Delivery Hero’s consumer brands in MENA were down to three: Talabat, Zomato (only in the UAE), and HungerStation. Technically, there was a fourth—YemekSepeti—since the company includes Turkey in its MENA reporting.
InstaShop’s acquisition by DH and Talabat, the fintech
But then they acquired InstaShop, a Dubai-based grocery delivery marketplace, for $360 million, to make it five. This was Delivery Hero’s biggest acquisition in the Middle East. InstaShop had a presence in the UAE, Egypt, Qatar, Bahrain, and Lebanon.
(As I discussed above, Uber Eats also exited the Middle East in 2020).
It might feel like a lot of detail, but the context (especially) around acquisitions is key to understanding how Talabat evolved into its current form.
By the end of 2020, it had grown its GMV to about $2.7 billion.
The following year, 2021, it expanded to Iraq, its eighth market. In 2022, Talabat launched two major offerings: a postpaid service in the UAE and its membership program, Talabat Pro. By 2023, the platform hit 1 million daily orders and introduced a co-branded credit card with a local bank.
Then, in August 2024, Delivery Hero revealed plans to float 15 percent of Talabat on the Dubai Financial Market, amounting to 3.49 billion shares. The IPO launched on November 11, with shares expected to start trading in mid-December.
With all these out of the way, let’s get to numbers and competition today.
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Talabat today and the headline numbers
Let’s look at the headline numbers. I’ll explore these in detail later, but here’s a quick snapshot of where Talabat stands.
As of today, Talabat operates across 80 cities in eight markets; UAE (its biggest market), Kuwait (should be its second largest), Qatar, Oman, Bahrain, Egypt, Jordan, and Iraq.
It has 6 million monthly active customers (as of September 2024), 65,000+ partners (restaurants, grocery stores, and other shops), and 119,000 riders.
Delivery Hero no longer reports order volume, but Talabat confirmed 1 million daily orders in 2023. Assuming this was consistent throughout the year, that’s 365 million annual orders, driving a GMV of $6.1 billion in 2023, up a 17.2 percent increase year-over-year. This translates into an average order value of $16.6.
The company demonstrated an even stronger growth in financial metrics. Revenue rose 27.3 percent to $2.2 billion, gross profit climbed 30.9 percent to $691 million. Adjusted EBITDA grew 47.9 percent to $321 million, and net income saw a 58 percent jump to $257 million.
I’ll dive into each metric below, but the big delta between GMV and net profit growth isn’t a result of one-off factors. It represents real growth in the company’s net profit.
