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Deliveroo

Food delivered as fast as a kangaroo

Sector: Futurefood
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Deliveroo is an online food delivery company stretching form the UK across Europe to Dubai, Australia, and Hong Kong. Orders are placed through the Deliveroo website and then self-employed bicycle or motorcycle couriers transport orders from restaurants to customers.

Deliveroo has become London’s most talked-about startup. In 2013 investment banker William Shu unleashed his entrepreneurial urge, and since then Deliveroo delivery bikes have become ubiquitous across the British capital. She has also landed £137m from major investors and now sees Uber — among others — in his wing mirrors as he furthers his plan to dominate how food is delivered in cities around the world.

Shu and a couple of helpers were picking up food from restaurants in Chelsea and delivering it to local residents just three years ago. At the last count, it is now dispatching a vast fleet of pedal and motorcyclists to 5,000 restaurants in 52 cities across 12 countries and is being earmarked as a global tech-meets-logistics giant for the modern age. The rise has been meteoric.

However, Deliveroo no longer operates below the radar and faces stern questions about how resilient its business model is. As it launches around the world, how well can it stand up to a host of competitors?

Any appraisal will invariably lead to a discussion about its ‘playbook’, a term popularised by Uber — the company that has defined the on-demand economy — referring to its finely tuned blueprint. The blistering speed of Uber’s international roll-out is considered to be a function of this playbook of streetwise tactics and wily manoeuvres to establish the service in a variety of cities with a level of speed and impact that no one had previously seen.

Deliveroo’s own playbook is built on hyper-locality and the intense propagation of a triumvirate of constituents: restaurants, drivers and customers within a 2.5 mile radius. The process of lighting the spark in an area to see if it reaches a point of sustainability is an anxiety-inducing and cash-draining affair. Deliveroo is believed to have honed its loss-making period down to just three months for a typical neighbourhood that it has launched in.

Few companies have embraced the ‘think global, act local’ maxim as emphatically as Deliveroo, which hasn’t deviated from drilling down to micro areas even as it has become bigger. Each patch of streets is identified based on how well it ticks its three golden criteria: lots of nice restaurants, affluent locals and people densely packed in together.

Only when all three exist, the company says, can it offer sufficient choice and deliver within its 30- minute threshold. Because of this criteria, even its early fans thought the concept little more than a ‘Kensington startup’; surely the Deliveroo concept (and prices) couldn’t stretch beyond the most salubrious of postcodes. As it has turned out so far, very few areas the company has launched in have flopped, prompting it to take more gambles and loosen its criteria. The model appears to have worked in student-heavy towns such as Exeter, lower-income cities like Coventry and even sprawling cities including Cheltenham and Berlin. All a long way from King’s Road.

It’s now preparing for a major international push. It launched in Dubai, Singapore, Hong Kong and Melbourne in autumn last year and the background of its latest investors offer a revealing insight into the company’s next steps.

The lead investor in the last round was DST Global, a major investor in Facebook, Spotify, Airbnb, Twitter and the key backer of India’s biggest e-commerce firm, Flipkart. Deliveroo also took investment from Greenoaks Capital, which has interests in one of the world’s most lauded e-commerce businesses, South Korean firm Coupang and Hummingbird Ventures, best known for guiding investments in Turkey and the Middle East.

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