Deliveroo apologises to riders for bonus overpayments

Food delivery firm Deliveroo has apologised to riders after a software error meant some were overpaid a bonus.

Riders were promised a payout of between £200 to £10,000 after Deliveroo listed its shares in London last month.

A spokesperson for the firm said all rider payments had been halted while the glitch was sorted out, but that riders had all now received the bonus.

Meanwhile, Deliveroo reported that orders and sales more than doubled in the first three months of 2021.

Riders were notified that they would get a bonus which was due to be credited to their app accounts on Tuesday.

Deliveroo said in a statement: "A technical error meant a small number of riders were offered a higher payment than intended.

"We have apologised to riders for this confusion. The £16m thank-you fund has been paid in full and is a sign of our appreciation of their contribution."

Deliveroo declined to say whether riders who had been paid extra in error would be able to keep additional money.

Takeaway growth

Deliveroo has been rapidly gaining customers as people have looked for food delivery options during the coronavirus pandemic.

In the first three month of the year the number of customers using the delivery firm each month rose by 91% year-on-year to 7.1 million.

But Deliveroo shares dived when it listed on the London Stock Exchange last month, and fell more than 4% in afternoon trading on Thursday.

The firm said in a statement it was unsure how much of the quarterly growth was due to lockdown.

But it still expects full year sales to rise by 30% to 40%.

The firm is loss making and as this was trading update did not offer guidance on future profits.

Founder and chief executive Will Shu said: "This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of Covid-19 restrictions.

"So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance."

Deliveroo said that orders soared by 121% in the UK in the past three months to 34 million as the pandemic takeaway boom continued during the third national lockdown. In its overseas markets orders were up 108% to 37 million.

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However, the company said it expects its current rate of growth "to decelerate as lockdowns ease", although the extent of the slowdown remains "uncertain".

The update comes weeks after the group's flotation on the London Stock Exchange, which saw the value of its shares cut by a third in a week amid investor concerns over corporate governance and worker rights.

Will Shu said riders value flexibility above all else

Deliveroo riders are self-employed, meaning they are not entitled to earn a minimum wage from the company, or holiday and sick pay.

Mr Shu said on an analyst call on Thursday that self-employment was "the only way you can give complete rider flexibility, which is what they want".

"I'm very supportive of pensions and holiday pay, but in a manner that is congruent with [riders] being able to log in and log out," he said. "I don't personally support one model."

"There is a trade-off between flexibility and security," Mr Shu added. "Riders want to have flexibility and they value that above everything else."

In its update the firm said rider satisfaction in the UK was at an all time high of 89% at the end of March.

Michael Hewson, an analyst at CMC Markets, said: "This morning's update is certainly encouraging, and shows the business is heading in the right direction.

"It remains to be seen whether it will be enough to tempt shareholders back on board after the losses [in the share price] seen since the beginning of the month."