Deliveroo doubles sales but losses balloon as takeaway company makes 'major investments'

Revenues jump to £277m as rapid expansion accelerates

Ben Chapman
Monday 01 October 2018 14:51 BST
Deliveroo said it now works with 50,000 restaurants and the same number of riders
Deliveroo said it now works with 50,000 restaurants and the same number of riders (Getty)

Deliveroo more than doubled its annual sales but losses also ballooned as the company shelled out on “major investments”.

The food delivery service reported revenues up 116 per cent to £277m in 2017 as pre-tax losses widened to £184.7m from £129.1m a year earlier.

European sales grew 99 per cent while all other markets saw a rise of 207 per cent.

The results come as speculation intensifies that Deliveroo may be bought out, with Uber rumoured to be mounting a bid of more than $2bn (£1.5bn).

Deliveroo said it now works with 50,000 restaurants and the same number of riders after rapid expansion since it was founded in 2013.

Following criticism from some riders and unions over pay and conditions for staff, Deliveroo said it has invested £10m to offer free accident and injury and third party liability insurance.

The year also marked a milestone for Deliveroo as it raised close to $500m in funding, at a valuation of more than $1bn, giving it the coveted “unicorn” status. A unicorn is a startup valued at more than $1bn.

Co-founder and chief executive Will Shu said: “Deliveroo is growing rapidly around the world, driven by our passion to bring amazing food to people whenever and wherever they want it.

“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.”

The company began directly taking on rival JustEat by allowing restaurants to use their own riders to fulfil orders received via the Deliveroo app. Deliveroo said the move would “dramatically” extend the company’s services. Previously, restaurants had to use Deliveroo’s own riders.

“We are changing the way people eat and helping restaurants to expand to new areas and in new ways,” said Mr Shu.

Among the most popular dishes ordered last year were Le Big Fernand from Big Fernand in Lille, Burritos from Dublin's Boojum, and the Five Guys Cheeseburger in London.

Fiona Cincotta, senior market analyst at Cityindex said Deliveroo had a balancing act to perform as it pursues more growth.

"Deliveroo has no plans of slowing down and says that it will continue investing in further expansion," she said.

"And this is where the balancing act comes in. While new regions like Taiwan are likely to become a very interesting and fast growing area for the company it is questionable as to at which point the company’s bottom line will turn black – at the current pace unlikely before the planned IPO.

"Looking at its competitors it is clear that the expansive growth in the food delivery business can be sustained only for a relatively small number of years.

"Shares in London-listed Just Eat which listed in 2014 rose rapidly until 2018 but are now trading at roughly the same level as they did at the beginning of the year.

"German-listed Delivery Hero also recently warned it does not expect to break even this year or in 2019 after investments of €80m (£71m)."

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