Deliveroo Looks To Expand In The UK Amid Global Competitors
As London-based meal delivery service Deliveroo gears up to go public, its revenues are plummeting. Even as the United Kingdom’s lockdowns have incentivized many consumers to order food delivery more often, with Deliveroo CEO Will Shu estimating the pandemic “accelerated consumer adoption of these delivery services by about two to three years,” according to CNBC, the company nonetheless posted 2020 losses totaling $309 million (223.7 million pounds).
As it prepares for its initial public offering (IPO), the company is also working on expanding further into the U.K., looking to add 100 new towns and cities throughout 2021, Reuters reported. The expansion will allow Deliveroo to reach to 4 million more consumers, while the company also looks to grow its reach in 150 of the locations it already serves.
However, despite being the most popular U.K.-based food delivery service, Deliveroo is far from top dog in the region. According to Statista, Deliveroo is only the third most popular provider of restaurant and food delivery in the U.K., with the gold medal going decisively to Just Eat Takeaway.com, a Netherlands-based restaurant aggregator, and the silver medal going not to an aggregator at all but to Michigan-based pizza chain Domino’s. Trailing in fourth place is Uber Eats, headquartered in San Francisco.
Business of Apps reports that revenue for food delivery apps in the U.K. totaled $5.9 billion in 2020, while the restaurant industry as a whole, per Statista’s research, totaled $35 billion in revenue, meaning delivery app orders accounted for about 17 percent of restaurant spending during the year.
As Deliveroo struggles to make the costly restaurant aggregator model work, Just Eat Takeaway.com has seen profits soar, drawing in big investors and growing its user base. The company announced its intention to acquire Grubhub in June, and the merger was approved by shareholders in October.
“I am excited that we can create the world’s largest food delivery business outside China,” Jitse Groen, CEO and founder of Just Eat Takeaway.com, said in the release announcing the acquisition. “We look forward to welcoming [Grubhub’s Matt Maloney] and his team to our company and working with them in the future.”
Domino’s Pizza U.K., for its part, also saw strong growth during 2020, per a company release Tuesday (March 9). The pizza giant saw sales of $1.8 billion (1.3 billion pounds) in 2020, marking 11.4 percent growth. In the statement, Domino’s UK CEO Dominic Paul attributes this success to app developments, new menu items, supply chain investments, marketing spend, digital participation, and to the chain’s “uniquely powerful brand.”
Looking ahead, Paul said, “Our new strategy will enable us to build upon our strengths in both delivery and collection and provide our customers even better quality and value, which will drive continued strong performance … As the economy begins to reopen, we have invested in our capabilities to enable us to [capitalize] on the substantial opportunities ahead.”
Domino’s success in the region should be a positive indicator for large U.K. restaurant businesses looking to shift to in-house delivery. Unlike in the U.S., where third-party meal aggregators hold the lion’s share of delivery sales, with no restaurant business even ranking in the top five, U.K. consumers may be more likely to seek out restaurant chains’ own digital platforms to place orders directly from that company. As the vaccine rolls out across the U.K., and consumers begin to form their post-COVID dining habits, restaurants have a unique opportunity to market directly to these amenable consumers.