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Deliveroo has made a loss on every delivery made since day one

ORIGINAL POST
Posted by Ed 2 yrs ago

On any given weekday evening, Regan Yeung’s yakitori joint in Central buzzes with the post-work crowd. Diners come to his restaurant for the fresh-off-the-grill skewers and stay for the drinks and banter with friends.

But these are no ordinary times. Since early January, when the Hong Kong government banned dine-in services after 6 p.m. due to a new Covid-19 outbreak, Yeung’s restaurant has been empty for dinner.

Some of his regulars come to buy takeaway, breaking the monotony of the otherwise-quiet restaurant. But most of the traffic – in the loosest sense of the word – is a steady trickle of couriers from delivery giants Foodpanda and Deliveroo.

“The commission they charge is steep,” Yeung said, explaining that the online delivery platforms take about 30 per cent from each order that comes via their apps.
 
https://hongkongfp.com/2022/01/23/the-price-of-participation-for-hong-kong-restaurants-delivery-giants-are-a-double-edged-sword/

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COMMENTS
Ed 2 yrs ago
Deliveroo has made a loss on every delivery made since day one
 

Deliveroo is a food delivery company that serves as an intermediary between customers and restaurants.

 
Using the app, customers place (and pay for) an order, which is then conveyed to the participating restaurant.
 

When the food is prepared, a Deliveroo courier collects the food and delivers it to the customer in the comfort of their own home, office, or wherever else they’ve chosen. Deliveroo takes a cut of the revenue, and pays the delivery delivery, unless the restaurant carries out its own deliveries.

 

Deliveroo was founded by Will Shu in 2013. The American (a banking analyst by trade) had recently moved back to London after an MBA, and was shocked at how few of the city’s (many) better restaurants offered delivery. He moved to rectify this by creating Deliveroo, alongside Greg Orlowski.

 

The pair had attempted something similar a few years before, after Shu initially moved to London and found himself eating from his local supermarket as opposed to the higher-quality takeaways he enjoyed in New York. They were limited by the failure of smartphone technology to match their ambitions, however.

 

The company’s purported goal is not just to make restaurant quality food more easily accessible – but to kill home cooking altogether (notably Shu claims an omelette is the height of his culinary prowess – so home cooks might want to take that with a pinch of Maldon salt).

 

The app uses an algorithm (named Frank) to ensure the efficient delivery – aiming to maximise earnings for both restaurant and courier, and minimise customer waiting time. Delivery radius is limited to maintain this level of efficiency, and to encourage people to order from restaurants that are local to them.

 

Most deliveries are made by a fleet of Deliveroo couriers, who along with Uber drivers are archetypes of the gig economy. Like many other names in the gig economy, Deliveroo has seen its fair share of controversy over workers’ right and pay.

 

Despite this – or partly because of it – the ‘unicorn’ company has been wildly successful. Indeed, it enjoyed a period as the fastest growing company in Europe. It has expanded into a number of new markets in Europe, Asia, and Australia operating in a total of 12 markets (having left the 13th, Germany, in August 2019).

 

Deliveroo moved offices in 2017 to Cannon Street in London, and hired 300 new tech staff in a move to build one of the largest tech hubs in the country. Deliveroo also bought Edinburgh-based software company Cultivate in 2019, as part of a move to set up a new tech hub in Scotland. Difficulties arising from the coronavirus pandemic, however, have led Deliveroo to lay off 15% of its staff.

 
 
Deliveroo’s troubles, however stem from before this period. It has made a loss on every delivery made since day one. While revenue continues to rise, losses continue to deepen – calling the robustness of the business model into question.
 
https://www.businessofapps.com/data/deliveroo-statistics/

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