Retail

Deliveroo Is Determined To Stay Independent

As the market for delivering dinner has heated up globally, U.K.-based food delivery platform Deliveroo has established a strong foothold among its global customer base. In the last year, the platform’s sales have doubled to $364 million (£277 million). The problem is that all of those sales aren’t adding up to profitability as of yet. The firm’s total year-on-year losses were also up, by 43 percent, to $243 million (£185 million).

Those losses are the cost of expansion, according to Deliveroo, which cited $139 million ( £106million) invested in growth in various directions.

And despite its mounting reported losses, Deliveroo has been able to secure funding, raising $500 million (£382 million) in extra funding in 2017, bringing the value of the firm to north of $2 billion. To date the company has partnered with 50,000 restaurants and 50,000 delivery riders around the world, and it’s aiming for expansion into its 13th global market, Taiwan, later this year — along with others the firm has thus far declined to name.

According to the firm, “Our growth is matched only by our ambition. We want to become the world’s definitive food company and we have invested heavily in innovation, technology, people and restaurants. We are changing the way people eat and helping restaurants to expand to new areas and in new ways.”

This year, those changes have included the opening of pop-up kitchens in France, the Netherlands, Singapore, Australia, Dubai and Hong Kong. The company said it will have 250 kitchens worldwide by the end of 2018. The firm also opened up its platform in July to allow restaurants use their own delivery drivers for orders that are placed through the app. Previously, using Deliveroo’s ordering service required restaurants to also use their fleet for food couriers. That move was seen as a direct strike against Just Eat, another U.K.-based food delivery platform.

But Deliveroo has also attracted interest from bigger players looking to make a fast entry into global food delivery. Rumors began to emerge in late September that Uber was considered a likely buyer for the delivery startup, in a deal that was rumored to have been worth “billions.”

Reports in Bloomberg further indicated that the the potential purchase was an attempt on Uber’s part to move in quickly on the food delivery market in Europe, as Deliveroo remains the market leader in terms of penetration, with 200 cities under its banner.

And within about a week, it became clear that Uber was not the only big name in digital and mobile commerce interested in owning Deliveroo.  Reports that emerged shortly after the Uber rumors began making the rounds indicated that Amazon has also made a push to the firm before. Those unreported discussions took place about nine months ago — and came to nothing.

The rumored purchase price for Deliveroo? According to the Financial Times, somewhere in the neighborhood of $4 billion.

The public market debut? The Telegraph said at the end of last month that Deliveroo plans had been pushed from 2019 to 2020. This gives a bit more time for behind-the-scenes maneuvering with the aforementioned juggernauts.

Deliveroo CEO William Shu has adamantly maintained the firm is not for sale — though he enjoys reading the rumors as much as anyone else. “Deliveroo is the fastest-growing company in Europe, so people love to talk about us and speculate on what’s coming next,” Shu told PYMNTS.

The firm is broadly considering an IPO, though Shu has confirmed in media reports that it is not an area of focus for the firm at present. The IPO will likely be in the next 12 to 18 months, though the consensus is it is a much more likely event for 2020 than 2019. The goal going forward remains ongoing, independent expansion and increased collaboration with restaurant partners.

“Our ambition is to become the definitive food brand — that means transcending customer perceptions from just a food delivery company,” Shu said.

 

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