March 13, 2015    3 minute read

Deliveroo: Will They Deliver?

   March 13, 2015    3 minute read

Deliveroo: Will They Deliver?

Armed with a fleet of motorised scooters, an aesthetically pleasing website, a problem solving idea and fresh capital backing, this ingenious idea is bound to tickle your taste buds.

The problem

We’ve all been in the situation of craving a certain type of “quality” food but been too lazy to act on the demands of one’s palate.

The solution

Deliveroo has capitalised on this inertia by bridging the gap between sites like Hungry House and Just Eat and restaurants by actually bringing quality food to your doorstep.

The key difference between Deliveroo and competitors such as Just Eat and Hungry House is that it has a specific focus on the “premium” end of the cuisine spectrum. Deliveroo’s portfolio of partners includes well-known names such as Nando’s, Busaba Eathai and Gourmet Burger Kitchen as well as leading independents such as Dabbous’ Barnyard and Martin Morales’ Andina. Deliveroo has capitalised on the fact that such establishments don’t offer a takeaway delivery service. A unique selling feature of the Deliveroo model is that it uses its own drivers and cyclists, bringing a more consistent experience to the ordering process. This allows the company to charge a fixed fee of £2.50 per delivery and have an average delivery time of 32 minutes.

Deliveroo also helps the success of its partner restaurants by helping them to expand their customer base without compromising their focus on in-house customer experience. CEO, Mr Shu, has explained that a number of restaurants that use Deliveroo have increased their revenue by 30 percent and the service has a regular customer base of at least 50,000.

The start-up, which began in London, is looking to expand across the UK and beyond. Deliveroo carried out its first round of financing 8 months ago, when it was delivering to a few thousand customers in a handful of London neighbourhoods. The company has just completed its Series B financing, raising £25 million to beef up its UK and global operations. Further launches in Manchester, Birmingham, Edinburgh and Leeds are planned.

With expansion on the menu, factors such as population density, restaurant supply and a minimum affluence threshold need to be considered. It also considers cities as “hyper-zones”, allowing it to take account of factors such as delivery times, food temperature and maintaining a price-tag of £2.50.

As with any company in such an embryonic stage of development, this innovative idea does come with its challenges. Providing the transport infrastructure internally presents cost and scaling pressures. To add fuel to the fire, such a concept can be easily duplicated without competition or monopoly laws coming into play. Additionally, takeaway companies who are already well established with a strong reputation would potentially relish at the opportunity to make inroads into such a cut-throat market. Taking all of the above into consideration, this simple but innovative idea has the potential to be a game-changer, however, it will be interesting to see whether Deliveroo will in fact deliver.

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