Deliveroo sales keep growing despite cost-of-living crisis

Deliveroo has continued to increase the total value of sales, even as weaker economic conditions are causing customers to make fewer purchases.

The takeout platform revealed gross transaction value rose 8 percent year-on-year to £1.7 billion in the three months ended September, with growth in the British Isles outpacing international revenues.

Orders declined modestly to 72.8 million, with expansion in the UK and Ireland being offset by dwindling demand in the Asia-Pacific region following the easing of coronavirus restrictions.

Deliveroo also said the drop in orders reflected the traditional slowdown in European markets during the summer months and increasing consumer pressure, which led people to buy less takeaway.

But the monetary value of average orders rose 9 percent thanks to restaurants and retailers raising prices in response to rising food and beverage costs and the “continued optimization” of service costs.

Demand for takeaways has slowed significantly in 2022 as consumers return to eating out in hospitality outlets when they were unable to do so during strict lockdown periods.

In the third quarter of 2021, 7.3 million monthly orders were placed on Deliveroo’s platform, an increase of 82 percent from the same time the year before.

Despite a significant expansion in the number of restaurant partner sites and collaborations with, among others, McDonald’s, pharmacy chain Boots and WH Smith, orders per month were only 1 percent higher.

With many countries expected to slide into recession and inflationary pressures putting pressure on disposable incomes, takeaway delivery services appear to weaken further in the coming months.

Victoria Scholar, head of investment at Interactive Investor, said: ‘Deliveroo was a strong example of the pandemic stay-at-home trend in 2020, with huge demand for takeaways during lockdowns as restaurants and bars were forced to close.

“However, the economic reopening and the cost of living crisis have reduced demand for its non-essential supply.

Financial markets have also been unfriendly to tech stocks this year, given the global shift towards higher interest rates and the end of the era of cheap money.

Based on constant exchange rates, Deliveroo now expects GTV to grow by 4 to 8 percent this year, which is at the lower end of the previously indicated forecast range.

Nevertheless, the company has upgraded its earnings outlook and forecast an adjusted underlying profit margin of minus 1.2 to 1.5 percent of gross national product, compared to minus 1.5 to 1.8 percent previously.

Founder Will Shu said, “Throughout 2022, we have financially adapted to the business environment and moved forward on our path to profitability… We remain excited about the opportunity ahead and our ability to take advantage of it.”

Deliveroo shares were up 4.9 percent to 86 pence late Friday night, though their aggregate market capitalization has plummeted by more than £6 billion since a disastrous IPO in March last year.