Deliveroo orders double as lockdown habits endure

Deliveroo has said demand for its services has strengthened despite Covid restrictions easing.

The food delivery firm saw orders double to 148.8 million in the first half of this year, while the value of its transactions also doubled.

At the same time, it narrowed its pre-tax losses to £104.8m, as against £128.4m a year earlier.

It was the first set of results from the company since it floated on the stock market in March.

Deliveroo initially listed on the London stock exchange at 390p a share, but the price fell sharply on the opening day of trading, 31 March.

On Monday, its shares rallied on the news that German rival Delivery Hero had bought a 5% stake in the company worth £284m.

But in Wednesday trading, it was down 3.3% at 351p.

Cooped-up consumers flocked to order from Deliveroo during the earlier stages of the pandemic, when restaurants were closed and people switched to home deliveries.

The firm said it expected customer behaviour to moderate later in the year, but it remained "excited about the opportunity ahead".

It added that its outlook for the remainder of the year continued to be "optimistic but prudent, combining confidence in continued year-on-year growth in orders with an expectation that average order values revert towards pre-pandemic levels".

Strong growth

Deliveroo said its gross transaction value for the six months was £3.4bn, a 99% rise from the same period in 2020.

It repeated an earlier forecast that gross transaction value for the whole of 2021 would be 50% to 60% up on last year.

Founder and chief executive Will Shu said: "We are seeing strong growth and engagement across our marketplace as lockdowns continue to ease.

"Demand has been high amongst consumers. We have widened our consumer base, seen people continuing to order frequently and we now work with more food merchants than any other platform in the UK.

"At the same time, more riders are choosing to continue to work with the company because they value the work we offer."

Analysis

By Rob Young, business correspondent

Food delivery companies have been some of the standout winners of the pandemic. With people cooped up at home and dining in restaurants banned, a takeaway was for many the highlight of the lockdown week. Some analysts have questioned how much of that surge in business will persist as restaurants reopen.

Interestingly, Deliveroo says orders are "proving resilient" since the re-emergence of the hospitality industry. But it doesn't expect that to remain the case forever. There are warnings that consumer behaviour "may moderate" later in the year and that the value (but not necessarily the number) of orders will return "towards" pre-pandemic levels.

The company has diversified, though - it now delivers groceries from the likes of Waitrose, Co-op and Aldi. Chancellor Rishi Sunak has described Deliveroo as a "true British tech success story". By many measures, it is. But it's not yet a financial success.

Despite the huge increase in business over the past year, Deliveroo still didn't make a profit. Its losses were smaller than a year ago, but the company ended the first half £104.8m in the red. Investors - who were lukewarm on the company's shares when they started trading in March - may be wondering: if Deliveroo can't make a profit when eating in restaurants isn't allowed, when can it?

Deliveroo said it now covered 72% of the UK population. This was ahead of its plans, which had envisaged 67% coverage by the end of this year.

In all, it operates in 11 countries, including Australia, Belgium, France, Hong Kong, Italy, Ireland, the Netherlands, Singapore, United Arab Emirates and Kuwait.

However, it said it had now decided to pull out of Spain, because "achieving a top-tier market position would require a disproportionate level of investment with highly uncertain long-term potential returns".

The move comes after the Spanish government announced plans to give more employment rights to workers at food delivery firms and other online services.

"Deliveroo appears to be dominating the takeaway scene in many towns and cities, where its distinctive mint green-jacketed riders operate, despite Uber Eats and Just Eat rivals breathing down their neck," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"But investors appeared to have lost a little appetite for shares in early trading, with the company expecting customer behaviour to moderate later in the year."

She added: "There is speculation growing that Deliveroo could potentially be a target for takeover, given the rush of acquisitions in the British market."