Deliveroo Orders Drop, but Customers Up Spending by 10%

Deliveroo Plc, the British food delivery company, posted strong earnings on Thursday (Aug. 10) for the first half of 2023, even while total orders fell 6% as the company looks to return 250 million pounds ($317 million) to shareholders.

Deliveroo customers placed 145.2 million orders in the first half, a drop of 6% from the prior year’s 154.1 million, as the tepid economy curbs household spending, according to the earnings report. Those consumers who were ordering increased their basket size by 10% during the period ending June 30, spending 24.2 pounds (about $31) per order, up from 22.1 pounds. Gross transaction value grew 3% to £3.51 billion, compared to £3.41 billion a year earlier.

Founder and Chief Executive Will Shu said during the earnings call that despite challenging market conditions, Deliveroo improved its operating margin, with the margin improving to 1.1% in the period, up from 0.2% in the second half of 2022 and a negative margin of 1.5% a year ago. Shu highlighted the improvement in the company’s methods to deliver meals and groceries more efficiently to customers as one of the key developments that enabled them to upgrade their earnings guidance. He also highlighted the company’s efforts to improve the consumer experience.

“We set up a team to tackle how we mitigate the impact of food inflation to support our consumers,” he said. “This included setting up pricing incentives for our partners to encourage them to offer fair pricing and good value for money, but we’ve also been targeting promotions such as buy one, get one free.”

Deliveroo has been streamlining its operations in a bid to become profitable. The company is focused on building a better customer value proposition (CVP) and has undertaken steps including cost-cutting, restructuring measures and investing in new verticals. The company is introducing features such as grocery top-up, premium delivery and video content in its app.

The company’s adjusted earnings before interest, taxes, depreciation and amortization rose to £39 million ($49.6 million) for the first half of the year, according to the supplemental earnings report.

The company also has plans to partner with Gojek, a ride-hailing firm, in Singapore to offer savings and rewards to customers on both their platforms. This partnership announced last week, is a way to combine represents an attempt to food-delivery and ride-hailing. Shu said.

“We’ve got a partner who is looking to expand in ride-hailing in this market,” he said. “They don’t operate in food delivery.”

Additionally, the company has introduced its Plus subscription, with benefits, for customers and a white-label product called Signature, for large restaurant brands. This is part of the company’s strategy to focus on a subscription-based model and delivery-only kitchens.

The company, which had 948 million pounds in net cash at the end of the period, said it would return 250 million pounds of capital to shareholders. Deliveroo’s stock was trading up for the day at $127.80.