Following news that food delivery company, Deliveroo, made a worldwide loss of £129 million in 2016, CEO of Preoday, Andrew White, has sparked speculation claiming: “it seems its [Deliveroo’s] best bet might be to raise the fees it charges restaurants” as it attempts to move forward.
Putting its loss down to the cost of delivery, White added: “It seems one of the toughest areas for the company is the cost of delivery; it spent £127.47m on this last year.
“How will this company, with the eyes of the nation upon it, handle this loss and what will it do to correct its calculations? It can’t cut wages or staff numbers, not without a huge backlash, and not if it’s going to continue to scale and meet growing consumer demand.”
According to the BBC, although Deliveroo made sales of £128.56m – up from £18.1m in 2015 – “the cost of getting the goods to customers was £127.47m, leaving it a wafer-thin profit margin.” The company has also been investing in new technology and developing new sites around the world, as well as an internal expansion plan.
Speaking of its £129m loss in 2016, up from £30m in 2015, a company spokesman said: “Deliveroo is investing heavily in new technology and new sites across the world, including our innovative delivery-only Editions kitchens programme.”
“We are extremely proud that in only four years Deliveroo now works with over 30,000 riders and 20,000 restaurants to deliver great-tasting food in over 140 cities around the world.”
Reacting to the comment, White said: “If it is (to raise the fees it charges restaurants), we could see restaurants leaving the platform in their droves. When there are more affordable delivery options in the market, and digital ordering technologies that charge no commission at all, why would any restaurant marginalise its own profits further (many make just 10% profit on online orders) by paying more to keep Deliveroo afloat?
“It’s a difficult position it finds itself in, only time will tell who will suffer as (Deliveroo) fights to get back on track”.
It’s not as catchy as: ‘When is a door not a door?’ (answer, when it’s a jar) but it speaks to the idea that in-car collection, and the technologies that support it, are flexible enough to bend to the needs of a business and its guests.
Delivery can be daunting to the uninitiated, and it might be tempting to sign up with a third-party ordering aggregator that offers the service, such as UberEats, but other options could suit your business and brand better. Here we present three different ‘levels’ of delivery, starting with the most basic – and cheapest method: doing it yourself.