Deliveroo Business Model

oo7

Hi,

Does anyone know how Deliveroo operate their business in terms of generating revenue.

From what i can see on their site, they charge €2.50 for each delivery PLUS they obtain commission from each of their partners (restaurants and take aways).

Maybe their partners give them 10% commission on each order (€1.50 on a €15 order)... and maybe they give their delivery drivers / cyclists the €2.50 from each delivery... BUT... even those figures don't really look stack up or look plausible.

A - i doubt their partners would give them 10%

B - the average delivery driver / cyclist would need to process 5 deliveries in one hour just to make €12.50 an hour... which would be very hard to reach consistently over the day / night, for example, restaurant to house to next restaurant in 10 mins with no waiting around or delays. And they also need to factor in costs for fuel)

The above is just speculation... and hopefully someone has some info on how they operate?

jimmii

I've used them a few times and have wondered the same. They have to be getting a bigger cut of the food I assume. I don't think 5 deliveries am hour seems that many.

Graham

Deliveroo charges the user a flat fee of €3 per order, while the participating restaurants pay it 30% commission per order

Source: http://www.rte.ie/news/business/technology/2015/0420/695378-online-food-delivery-service-deliveroo-launches-in-dublin/

Ouch!

oo7

WOW... 30%

I can't see how or why a restaurant would do that... it would make more sense to have their own in house deliveries?

Graham

oo7 wrote: »

WOW... 30%

I can't see how or why a restaurant would do that... it would make more sense to have their own in house deliveries?

I think their usual target is restaurants that don't currently have a delivery service.

I guess for the individual restaurants it's almost splitting the G.P. on the food 50/50 with Deliveroo, something you'd need to consider carefully before jumping onboard. Essentially Deliveroo offer the restaurant an option to increase turnover without risk or additional overheads. It only costs the restaurant money if they're making money (all be it at a dramatically lower GP).

oo7

Graham wrote: »

I think their usual target is restaurants that don't currently have a delivery service.

I guess for the individual restaurants it's almost splitting the G.P. on the food 50/50 with Deliveroo, something you'd need to consider carefully before jumping onboard. Essentially Deliveroo offer the restaurant an option to increase turnover without risk or additional overheads. It only costs the restaurant money if they're making money (all be it at a dramatically lower GP).

Yeah, i actually thought they were trying to cover all restaurants, and that's why i couldn't see restaurants that had existing services, offering 10%, never mind 30%

I wonder what they pay their delivery staff?

jimmii

Graham wrote: »

Deliveroo charges the user a flat fee of €3 per order, while the participating restaurants pay it 30% commission per order

Source: http://www.rte.ie/news/business/technology/2015/0420/695378-online-food-delivery-service-deliveroo-launches-in-dublin/

Ouch!

Nice money in it for them at 30%! Its not €3 to users though so if they have got that part wrong they might be off with the % too. I've been using it since launch and its always been €2.50. Must say their customer service has been very good too very quick to reply and when one of our orders leaked into the drivers bag they comped us our next meal we didn't even need to contact them the driver reported it and they emailed us before we'd even finished our food!

Graham

jimmii wrote: »

Nice money in it for them at 30%! Its not €3 to users though so if they have got that part wrong they might be off with the % too. I've been using it since launch and its always been €2.50. Must say their customer service has been very good too very quick to reply and when one of our orders leaked into the drivers bag they comped us our next meal we didn't even need to contact them the driver reported it and they emailed us before we'd even finished our food!

Fast, Good, Cheap, pick two. Deliveroo apparently chose Fast and Good.

MyPeopleDrankTheSoup

their business model is get as much VC money as they can while the central banks have the printing presses on 24/7.
https://www.crunchbase.com/organization/deliveroo#/entity

Buttercake

I really hope Deliveroos don't become a fad like Deals websites and Fish that eat your Feet

The_fever

I queried it myself with a driver.
He gets paid 8euro an hour for when he is on. He can just sit at home and get paid, should no orders come in. He lives in deangrange and I was getting a delivery to stillorgan. An order comes through ib his phone and he can chose to accept or not He says he is lucky as most drivers hang around McDonalds while waiting for orders to come in. Great service

jimmii

Buttercake wrote: »

I really hope Deliveroos don't become a fad like Deals websites and Fish that eat your Feet

I don't think it will takeaway delivery has been around for a long time and seems unlikely to go anywhere. Why do you hope it disapears? I think it is bad for chefs they are going to know their food just isn't going to taste so good when it arrives but for the business it makes sense.

Cianos

There are a few things to note with their model

1. Customers expect to pay slightly higher restaurant/casual dining prices, because that's what they'd pay if they were eating at the restaurant (and this is actually helped by ordering through a 3rd party - the customer would respect the fact that everyone has to get paid). This allows for a wider margin above the overheads (that also doesn't include drivers, vehicles etc) to play with.

2. They get to leverage heavily on the brands of their restaurants. Given that these tend to be cool/trendy places this is a big plus from a marketing perspective.

3. From what I've seen, restaurants become ambassadors of the Deliveroo platform by pushing the fact that they're on Deliveroo (because it's the first time they've been able to offer delivery, so naturally they're excited about it).

4. It's a perfect fit for social media - combining point 2 & 3 above means Deliveroo get good penetration through social media which again is a perfect fit for their target demographics.

5. Their branding is slick and modern looking, unlike the quite tatty Just Eat for example. This helps carve and single out their niche.

6. Their pitch to restaurants is quite simple and straightforward and because they've no competition they can demand such a high % (personally I'm not surprised at 30%, it had to be high for it to actually work).


The down sides;

1. They're limited to cities/high density areas. The model just doesn't work in low density areas.

2. In the customer's mind the experience is built up to leverage around the experience of dining out, yet the actual experience is missing every aspect of dining out except the food itself. Food is often about the setting and the context as much as the meal itself, so when they're eating expensive restaurant food on their couch it just mightn't be as good as they thought it would be. I'd be interested to see how their repeat orders compare to other online ordering services.

antoinolachtnai

The other thing is that Deliveroo is investing heavily in marketing and advertising. This adds value to the product for the restaurants.

Ayewserious

How do I contact deliveroo Ireland

Bandara

Ayewserious wrote: »

How do I contact deliveroo Ireland

I genuinely don't mean to be smart here but you either ring them or you email them via the numbers and addresses on their website.