Deliveroo shares have tanked 53% since the start of the year as the waning effects of the pandemic put a dent in the firm’s growth.
(Picture: Andrew Parsons / Parsons Media)Pre-tax losses at takeaway app Deliveroo have shot up to £147 million as hard pressed customers start to feel the impact of inflationary pressures.
Revenue in the first half of 2022 climbed 12% to top £1 billion for the first time, but swelling order numbers were partially offset by a drop in order sizes.
Deliveroo boss Will Shu told the Standard: “We’re taking market share in key markets.
“People are [still] ordering but they might order a cheaper item on the menu or maybe not order any drinks.” Average order size fell 3% from £22.70 to £22.10.
Growth in the second quarter of the year slowed to 2% from 12% in the first quarter, which Deliveroo said was a result of “the impact of increased consumer headwinds”. Last month, the company slashed its revenue forecasts to reflect the slowdown.
“We’ve taken into account a deteriorating economic situation,” Shu said, cautioning for the firm’s prospects in 2023 and beyond “we’re going to need more data points to figure that out”.
The company said it was weighing a complete withdrawal from the Netherlands, a market it first entered in 2016, adding it “does not hold a strong local position”.
“Deliveries from independent restaurants is just more challenging and at the end of the day it’s just a small market,” Shu said.
Deliveroo also announced the immediate departure of Next boss Lord Simon Wolfson from its board, with Wolfson saying he had too many other commitments.
“He spent a huge amount of time with me personally — he and I have a great relationship,” Shu said. “We’ll continue to meet up and chat [but] we’ll miss him.”
In May, the firm announced McDonald’s burgers would be available on the UK app as part of a new strategic partnership, while it extended existing alliances with supermarkets Waitrose, Sainsbury’s, Co-op and Asda.
Russell Pointon, director of consumer at analysts Edison Group, said: “The expansion of these partnerships is a strong strategic step for Deliveroo as it navigates a tricky economic environment.
“Widening its customer base will be crucial as consumers limit their spending even further in the coming months.”
Deliveroo shares went up 4.2% this morning. The stock has tanked 53% since the start of the year as the waning effects of the pandemic put a dent in the firm’s growth.
Deliveroo’s order numbers compare favourably with its main London rival Just Eat Takeaway, which last week reported a 7% drop in orders, while the value of each order fell 3%. The UK and Ireland performed worse than other European regions with a 13% decrease over last year. However, Just Eat’s results pleased shareholders, who welcomed the firm’s narrowing losses alongside its commitment to reach profitability by the end of 2023.
