Advances in Economics, Business and Management Research, volume 211

Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)

An Analysis of Deliveroo’s Operation Strategy and

Food Takeaway Industry
Xiaoyao Pang1, a, *, †, Yuhan Shang2, b, *, †, Jiaxi Song3, c, *, †
1
Lee Shau Kee School of Business and Administration, Hong Kong Metropolitan University, Hong Kong, 999077,
China
2
Business School, University of Exeter, Exeter, EX4 4QL, UK
3
Economics and Management School, Nantong University, Nantong, 226019, China
*Corresponding author: as1198082@hkmu.edu.hk, bys500@exeter.ac.uk ,csong_jx97@163.com
†
These authors contributed equally

ABSTRACT
The present study analyses and evaluates the operation strategy and current development status of Deliveroo by using
Porter’s Five Forces, Industrial Life Circle, SWOT Model, Value Chain, quantitative comparison, marketing and
financial analysis to get the risks and future prospects. Although Deliveroo’s financial situation is not very good, and it
faces risks such as high network dependence, many competitors and legal restrictions, it is entering a stage of rapid
development through continuous investment and occupation of the market and may gradually catch up with and surpass
some old takeaway enterprises in the future. Additionally, the analysis provides references and inspiration for other food
takeaways and Internet enterprises.

Keywords: Food takeaway industry, Deliveroo, Strategy, Risks, Prospects,

1. INTRODUCTION growth of the delivery and takeaway food market over the
forecast period. According to a study by Statista the
The food delivery industry, a major component of the online food delivery business generated US$4,869
food service industry, has flourished in recent years and million in revenue in the UK [1]. With the business set to
has experienced a breakthrough from restaurants grow by 8.3% by the end of 2023, there is no doubt that
delivering in person to the emergence of specialised the takeaway industry is growing unstoppably.
delivery companies, and from the beginning when Deliveroo was founded in 2013 by Will Shu and Greg
consumers were unable to know the process to now when Orlowski in London with the original concept of delivery
consumers can monitor the delivery location in real time. quality [2]. On March 31, 2021, Deliveroo was listed on
Recently, advances in technology, particularly cloud London Stock Exchange, becoming the largest
computing and big data, have created the premise for the technology stock listed, which is of great significance to
transformation and upgrading of the takeaway industry. UK after Brexit. Deliveroo has many characteristics that
Coupled with the fact that millennials have become the should be paid attention to and studied. Firstly, Deliveroo
mainstay of consumption, they are much more receptive is one of the benchmarks in the UK food takeaway
to new things and the accelerated pace of life has forced industry, and it was also rated as one of the Top 10
them to seek out conveniently available food compared takeaway companies by BizVibe in 2020 [3]. Deliveroo
to other age groups. This has created a demand for a is representative for the UK food takeaway industry.
booming takeaway industry. Impacted by the outbreak of Secondly, Deliveroo is a young company, which is still in
COVID-19 in 2019, most governments have successively the growth period of its own development. Studying its
taken lockdown, making dine-in food impossible for development track is of reference significance for the
restaurants and forcing people to opt for ordering food on whole takeaway industry. Thirdly, although Deliveroo is
their mobile phones and having it delivered to their a takeaway enterprise, it also has the attribute of an
homes. This has provided an opportunity for the Internet enterprise. For example, in the early stage, it will
takeaway industry to explode. The growing public continue to invest funds to obtain more users and occupy
demand for home delivery and fast food will drive the a larger market. The research on Deliveroo also has

Copyright © 2022 The Authors. Published by Atlantis Press International B.V.

This is an open access article distributed under the CC BY-NC 4.0 license -http://creativecommons.org/licenses/by-nc/4.0/. 142
 Advances in Economics, Business and Management Research, volume 211

reference significance for other Internet enterprises. based on the internet. Conversely, suppliers can also sell
on multiple platforms at the same time. This two-way
According to several reports on Deliveroo, although
choice means that Deliveroo and the supplier are
its revenue is increasing year by year, its net profit is still
independent of each other. Although there can be some
in a negative state, which is largely due to the continuous
restaurants such as “five guys” that are only available on
investment in expanding market and user scale.
Deliveroo, this does not mean the supplier has strong
Deliveroo may make more profits by adjusting pricing
bargaining power, as Deliveroo has many other options.
and changing profit strategy after reaching monopoly in
Deliveroo can establish its own sourcing channels to gain
the future. Furthermore, Deliveroo’s business scope is
close commercial ties with suppliers.
also expanding. From only delivering food before, it also
delivers retail products now [4]. Then it is also expanding Bargaining power of customers: Due to the explosive
other new businesses, such as member subscription and growth of the food delivery industry, there are not only
others. Overall, Deliveroo’s operation status is still at a Deliveroo, but also platforms such as just eat and uber eat
normal level, in line with the characteristics of takeaway that are available for customers to choose from. Moreover,
Internet enterprises in their growth period. meals are being offered in a variety of styles at clearly
marked prices. The result is that customers can choose the
At present, the food takeaway industry is mainly
best value for money by comparing multiple platforms
studied from revenue and App usage statistics. And the
and it does not cost them anything to switch platforms.
existing British takeaway industry is mainly studied
However, this does not mean that Deliveroo does not
through the comparison of a series of enterprises and the
have its own loyal customers. In fact, more than half of
overall comparison with the global takeaway industry.
customers still choose to use their usual Deliveroo over
There are also some studies on individual takeaway
the cheaper [4].
enterprises, but they are all relatively mature ones with
early establishment time, large scale, such as Uber Eats, Threat of substitutes: What can substitute for the
Just Eat, Grub hub. Nevertheless, there is little research convenience of takeaway are frozen cooked meals in
on the enterprises which are young, still in the growth supermarkets and food boxes like hello fresh, but either
stage and have growing scales, such as Deliveroo. This way, they haven’t affected Deliveroo’s target audience.
analysis of Deliveroo can help understand the growth Because as convenient as they are already, it is still not as
process of a young takeaway company and provide convenient as using Deliveroo to order takeaways.
reference and inspiration for other food takeaway and
Industry Rivalry: As mentioned above, the takeaway
Internet enterprises.
industry has a low barrier to entry, where platforms in
The paper is organized as follows. Section 2 is about addition to Deliveroo, such as uber eats and just eat, can
research on food takeaway industry. Section 3 is a offer their services, making competition extremely fierce,
company analysis of Deliveroo, including strategy especially in large cities like London. But Deliveroo has
analysis and financial analysis. Section 4 is about carved out a large market share for itself by offering
Deliveroo’s development status by comparing Deliveroo exclusive restaurants, a visible delivery process and
with competitors in the food takeaway industry. Section subscription membership benefits.
5 is a discussion part talking about Deliveroo’s future
prospects and risks. Section 6 shows the analysis 2.2. Industrial Life Circle
conclusion about Deliveroo.
Relying on the technical support of big data and cloud
2. INDUSTRY ANALYSIS computing, as well as the millennial generation’s
increased acceptance of new things and the accelerated
2.1. Porter Five Forces’s pace of social life, the food delivery industry has been
able to develop at a rapid pace and grow at a much higher
The threat of new entrants: Although entry into the rate. Coupled with the rapid development of technology
takeaway industry requires it to develop a specific and the maturing of internet technique, the cost of
platform and enter partnerships with restaurants, recruit takeaway delivery services has gradually decreased. As
delivery staff and other upfront preparations, as the mentioned above, its low market entry barrier, coupled
industry has only started to boom in recent years, there with the maturity of technology, a large number of
are fewer government restrictions, lower upfront capital investors are flocking to the industry and competition is
requirements and costs compared to other industries[5], gradually increasing. The food delivery industry has
and very low customer switching costs, with customers evolved from the Embryonic phase to the growth stage
tending to choose the less expensive platform，which and even the pre-shakeout phase.
makes the food distribution industry a low barrier to entry.
Bargaining power of suppliers: As an “intermediary”
between customers and restaurants, Deliveroo has no
limit to the number of local restaurants it can work with

143
 Advances in Economics, Business and Management Research, volume 211

3. COMPANY ANALYSIS developments and adjusts with them to the needs of its
customers. It does not just deliver meals; it can also buy
3.1. Strategy Analysis groceries [4].
Threats
3.1.1. SWOT Model
The food takeaway industry has a low barrier to entry,
Strengths with not only Deliveroo, but also Just eat, uber eats and
other platforms, making competition very tough.
Deliveroo has well-developed delivery network,
Company’s share price plunges after IPO, which affect
which currently operates in 12 countries, working with
investor confidence to be disenchantment [10]. Deliveroo
over 100,000 deliverers and over 140,000 restaurants.
uses a zero-worker economy, i.e., informal labour
Therefore It is completely visible during the delivery
through the employment of casual workers, which leaves
process and consumers can track the delivery process in
employee rights unprotected, and the hourly wages of
real-time. As it operates on a platform and does not have
some delivery workers do not even meet the minimum
a physical presence. It can save on facilities, rental
wage, a potential pitfall [11].
expenses and taxes to a certain extent. What is more,
Deliveroo has good marketing, which means as a young This model suggests that Deliveroo is highly
company, it can clearly identify its target audience. With competitive. Due to increased competition, they use
its humorous advertising and minimalist logo, it attracts differentiation and broad targeting to attract and retain
and influences consumers in different locations, potential and current consumers to gain more market
deepening their perception of Deliveroo and making share. In addition, to make them more reliable and
them subconsciously believe that Deliveroo is the first trustworthy, suppliers are carefully selected and
choice when ordering takeaway. As one of the first advertised through multiple channels. Meanwhile, they
companies to pioneer the food delivery industry, establish partnerships with restaurants to ensure a high
Deliveroo has accumulated a certain number of loyalty from both sides. As one of the first companies to
customers through good marketing and excellent service. market, Deliveroo is at a higher competitive edge, but the
Moreover, the number of loyal customers such as active increased competition has made it difficult to capture new
users, orders and subscriptions to Plus users on the market shares. Consequently, a strategy to convince
platform are increasing rapidly every month [6]. Taking customers is very important. Thus, the need for them to
advantage of Deliveroo’s strong position by partnering deliver and maintain their commitment to quality and fast
with supplier partners to obtain exclusive supply and service.
attract more consumers at a better price [7].
3.1.2. Value Chain
Weaknesses
Although Deliveroo’s mission is to provide fast, A clear differentiator in the value chain from the
transparent and reliable deliveries from fine dining competition is its Marketing & Sales and Service.
restaurants, it cannot be denied that some deliveries can For Marketing & Sales, Deliveroo highlights the
be poorly addressed so that the original delivery time will platform’s strengths and points of differentiation to make
be exceeded resulting in delivery delays hence food customers choose itself over its competitors. This
problems. Deliveroo relies on the platform to run its includes advertising targeted at the youth demographic, a
business, which means that when there is a problem with memorable logo and a combination of promotions during
the platform, it can lead to negative influence. In 2017 the Euros to bring Deliveroo closer to consumers to create
service issues were caused by a server crash that resulted an image of “fast food at a great value” to attract more
in hundreds of Deliveroo’s customers losing orders [8]. potential customers which is unmatched by the
Concerns about price are also one of its weaknesses. competition.
The delivery fee is relatively high compared to just eat.
Contrary to what consumers expect, they are more Providing quality service is undoubtedly an important
motivated by cheaper delivery fees. way to develop loyal customers. Deliveroo has made its
delivery process transparent and has placed more
Opportunities emphasis on after-sales service by providing non-
Due to COVID-19, restaurants cannot dine-in during obligatory feedbacks at the end of the meal for customers
the lockdown, only to take away, which has stimulated to evaluate and improve. Also, refunds are issued in the
Deliveroo’s user growth by almost 70% [6]. It continues form of credit points for incorrect orders, which can be
to innovate its technology on the platform, expanding the redeemed on the next purchase, meaning that consumers
capacity of the platform to process more orders more are more willing to make a second purchase.
quickly and making consumer applications more accurate
and faster [9]. As an emerging company, Deliveroo
readily embraces the need to adapt to social

144
 Advances in Economics, Business and Management Research, volume 211

3.1.3. Profitable Strategy using fast delivery as a selling point to attract customers.

In a highly competitive food delivery industry, Placement

Deliveroo has to differentiate itself: service and Since the service provided by Deliveroo is based on
marketing. the Internet, the company’s product placement is carried
Deliveroo offers consumers a choice of restaurants out online. Thanks to the spread of the Internet,
that cover almost most food varieties, even exclusives Deliveroo’s product placement can be ubiquitous. Taking
like five guys, which is far more than its competitors. Not advantage of modern people’s demand for convenience
only that, but its service continues long after the and restaurants’ demand for multi-channel profitability,
consumer has made a purchase. Based on the map, the Deliveroo can easily expand its influence. Deliveroo’s
delivery process is displayed transparently and updated target market is consumers who live in cities; most of
in real time with minimal time errors, which is much them are busy office workers and students. Therefore,
more reassuring than just eat, which only shows “your Deliveroo’s product placement design is mostly aimed at
order is being dispatched.” Due to Deliveroo’s millennials. Advertising is distributed through multiple
technological innovations, the speed at which lost or channels, such as YouTube, Instagram, Twitter, which
incorrect orders are processed (which is usually rare) is can make the unique corporate image is deeply rooted in
also very fast and refunds are often used as credit for the the hearts of the people.
next order. Deliveroo has a large market share through its Price
varied and high-quality food, visible processes and
efficient delivery service. It has a wide range of loyal Deliveroo attracts consumers to register by offering
customers, because of its trustworthy service. preferential policies and discounts and uses Deliveroo’s
app to place orders [13]. Deliveroo launched a
Deliveroo adopts a very precise marketing strategy. preferential policy for subscription members, which is
Brightly coloured adverts are placed on public transport, Deliveroo Plus, if the customer recharges on the app, they
social media and next to bars to attract the attention of the can enjoy the corresponding free delivery service, and the
youth. This does not work overnight, but subtly builds an customer does not need to pay additional delivery fees. In
image in the minds of consumers that “Deliveroo can addition to Deliveroo Plus, Deliveroo also provides many
provide value for money food quickly” which discount coupons and coupons, using Deliveroo Coupon
differentiated it from other platforms. By doing so, Codes to expand its influence and attract more new and
Deliveroo can capture a pool of potential customers by old customers to consume.
making them think of Deliveroo first and not the other
way around when they want to solve their meal needs. Promotion
Finding customers is an important part of Deliveroo’s
3.1.4. Marketing Strategy success. Deliveroo launches a free shipping promotion to
attract the attention of new users and encourage them to
In order to meet the demand of market, Deliveroo’s download and use delivery services. New users who
marketing strategy is gradually changing from 4P model register for Deliveroo can get free shipping for 14 days
to 4A model. with any product over £12 for their first order. Moreover,
The 4P Model [12] this experiential marketing strategy also allows Deliveroo
to have a group of long-term supporters.
Product
The 4A Model
Like other companies in the food delivery industry,
Deliveroo does not have any physical products. Acceptability
Deliveroo provides services to customers through its own Deliveroo’s application and registration steps are
developed applications and websites. Many people are simple, and customers have a high degree of service
accustomed to take-out meals, so Deliveroo provides a acceptability. Customers can directly use Facebook to
convenient way to connect restaurants, delivery staff, and register, or use email to register, fill in the required
customers to obtain the food provided by the restaurant information, and the registration will be completed soon.
to provide the customer with the food delivery service. At The operation of the use process is also very simple;
the same time, Deliveroo expanded and extended the customers only need to select or search for their favorite
brand’s services, through provided new service to meet food or restaurant to place an order. Deliveroo also
the needs of citizens during the epidemic and enhance designed a distinctive brand logo to deepen customers’
customers’ dependence on the brand. Due to the COVID- impression of the company, packaged delivery services,
19, most citizens avoid going out and try to buy all kinds set up a series of marketing strategies such as fast
of daily necessities through online shopping. Therefore, delivery service concepts to gain customers’ trust and
Deliveroo launched a grocery delivery service in October expand its influence on customer groups. Therefore, the
2020, providing products other than food delivery, and customer’s psychological acceptability is higher.

145
 Advances in Economics, Business and Management Research, volume 211

Affordability contact Deliveroo’s support team. Customers can not

only easily obtain Deliveroo’s services, but also get
Deliveroo’s customer base is mostly millennials,
corresponding service guarantees. Therefore, customer
most of them are students and office workers. For office
availability and customer convenience are very strong.
workers, their financial affordability is relatively high.
Although the student group cannot guarantee the source Awareness
of income, Deliveroo has launched Deliveroo Promo
Deliveroo successfully established brand awareness
Codes and various discounts to increase the affordability
among consumers through its iconic Kangaroo logo and
of customers’ orders. Affected by the epidemic, most
Robin Egg Blue. The origin of the name Deliveroo is the
people choose delivery services to purchase daily
combination of delivery and kangaroo, which represents
necessities and food. They believe that this way will be
the delivery service of Deliveroo and the service concept
safer and more convenient, which reflects the high
of fast delivery. At the same time, the multi-channel
psychological affordability of customers.
marketing approach also allows Deliveroo’s influence to
Accessibility establish brand awareness, loyalty and association among
consumers and potential consumer groups. Even people
Customers can easily obtain the delivery service
who have not yet used the Deliveroo service can quickly
provided by Deliveroo, obtain restaurant and food
recognize the Deliveroo logo, and these people are likely
information through their mobile phones, and pay for
to become Deliveroo’s customers in the future.
orders, even if customers change their minds, they can
easily cancel orders on the app. Deliveroo has a
professional support service team that provides after- 3.2. Financial Analysis
sales service to customers online at any time. If customers
have any needs or questions about the order, they can 3.2.1. Operating Analysis

1990.80
200 0.00 180 .00%

180 0.00
157.94%
160 .00%

160 0.00

140 .00%

140 0.00

120 0.00 120 .00%

100 0.00

834.50 100 .00%

771.80
800 .00

583.20 80.0 0%

476.20
600 .00

384.90
400 .00 60.0 0%

62.07%
200 .00

40.0 0%

0.00

2018 2019 2020 20.0 0%

(200.0 0)

(400.0 0)
-232.00 -226.40 0.00 %

-317.30

Revenue Cost of Sales Net Profit Revenue year-on-year

Figure 1. Deliveroo 2018-2020 Operating Analysis (£m)

Deliveroo’s total revenue increases to reach (grocery delivery) and membership subscriptions.
£1190.8m in 2020. This is mainly due to the gradual
Deliveroo’s cost of sales has increased year on year,
increase in total revenue as Deliveroo’s business grows
reaching £834.5m in 2020. This was mainly because of
well and its marketing strategy is aligned with its
increased costs for catering delivery riders as an increase
economies of scale. Which means its marketing strategy
in the number of orders due to the public’s preference for
focuses on capturing a specific target audience, the
ordering takeaway led to the unavailability for dine-in
millennials, through precise targeting and specific
during the lockdown period of COVID-19, in addition to
advertising and marketing techniques, to attract new
increased expenses such as technology costs due to the
users in a highly competitive environment while ensuring
development of new businesses and website upgrades.
user loyalty and maintaining its superiority as a leading
Meanwhile, cost of sales as a percentage of revenue has
company and its monopoly on market share control.
increased due to increased investment in technology
Coupled with increased synergies from its new business
improvements related to gross margin.

146
 Advances in Economics, Business and Management Research, volume 211

Deliveroo’s net losses increased from 2018 to 2019 expense ratio. Furthermore, Deliveroo plus subscriptions
mainly due to the increase in the number of riders so that and grocery delivery have grown rapidly and the share of
labour costs increased. In 2020, losses decreased. The business has increased. In addition to the front-end layout
main reason is Deliveroo has a significant marketing in the early stage of system website upgrade and the
impact and was being able to reach out to as much market launch of exclusive restaurants, although it is not yet able
percentage as possible, resulting in significant economies to cover the costs expenses, along with the gradual
of scale. Also, the company has continued to optimise its growth of business volume, the scale benefits will be
operational model (including measures such as increasing gradually released and revealed after the future
the number of restaurants with corresponding ordering experience climbing, and its net profit will gradually
systems), which has significantly improved the return to a positive value.
operational efficiency of the entire process. In addition,
Deliveroo’s continued investment in digitalisation, 3.2.2. Dupont Analysis
intelligence and other technologies has led to a
continuous reduction in the management and marketing
2018 2019 2020
6

4
3.48

1.74 1.78 1.96

2
1.48

-0.49 -0.41 -0.19

-2

-125.54% -129.30%
-4

-6

-8

-10

-12
-1043.75%

-14

-14.3
-16

Net Profit Margin Asstes Turnover Equity Muliplier ROE

Figure 2. Deliveroo’s 2018-2020 DuPont Analysis

Deliveroo’s net profit margin is at a low level, with Deliveroo’s historical total asset turnover ratio is
the highest value in the last three years still being above 1 and remains above 1.5, indicating its high and
negative. This is because Deliveroo’s position in an robust asset utilisation and business efficiency. It reached
emerging industry and its internet properties meant that it a new high of 1.96 in 2020, reflecting Deliveroo’s strong
invested heavily in the early stages of rapid expansion to growth capacity.
increase its market share, as mentioned earlier. At the
Deliveroo’s equity multiplier has fluctuated around 2
same time, as the business grew in scale, monopolies
recently and is generally good except for 2019. The
gradually developed in the food delivery industry. The
negative value in 2019 is possibly the result of the
“price war” with competitors has led to a constant
company starting to optimise its capital structure
squeeze on Deliveroo’s margins to ensure timeliness,
following its IPO coupled with the impact of the epidemic.
while new businesses such as grocery delivery are in the
It subsequently increased its investment in assets as
early stages of development and costly, resulting in a low
financial leverage picked up to an overall high level,
or even negative net sales margin for the company overall.
suggesting that Deliveroo has a strong ability to leverage
Coupled with the black swan event in 2019, the food
external assets.
industry was severely impacted.

147
 Advances in Economics, Business and Management Research, volume 211

3.2.3. Profitability Analysis

Figure 3. Deliveroo 2018-2020 Profitability Analysis (%)

Deliveroo’s gross profit margin is very low and shows increase into positive territory in the future.
a slight downward trend. This is because Deliveroo is a
Deliveroo’s ROE is negative. In 2019, due to the
labour-intensive enterprise and requires a large amount of
impact of COVID-19 resulting in a significant decline in
labour costs to maintain its expanding business scale,
its non-current assets and other reserves with a significant
making the costs constantly higher. Secondly, Deliveroo
increase in ROE for the year. Although it has been
has been able to compete with Uber eats and others to
negative for almost recently, which cannot be said that it
capture market share thus reduce prices, resulting in
has no growth potential. This is because it is losing
lower revenue per bill. Finally, new businesses such as
money as a young company due to early costs such as
grocery takeaway are at an early development stage with
capital expenditure, advertising expenses and debt
high input costs, resulting in a downward trend.
payments, but all costs came before the product or service
Deliveroo operating margins have been very low for gained market traction, which will continue for several
recently with increased. The low profit generating years to come. There is no denying that Deliveroo’s free
capacity of the business is since, as a takeaway platform cash flow is relatively healthy. At present it is the
like Deliveroo, low operating margins are to be expected expansion of the commercial competition that is making
due to its high sales volume but low prices. The negative it less profitable. However, commensurate with the
figure for the last three years is due to Deliveroo being a company’s current state of growth, it could translate into
newly listed company with large initial investment costs, a higher-than-expected ROE within a few years.
coupled with the fact that the new business is in the early
stages of expansion, and as the business capacity is 3.2.4. Solvency Analysis
released, it is expected profitability will continue to
1.857
1.802
1.6398
1.51

1.4102
1.0699 1.2956

0.7612 0.74
0.7123

0.4248
0.5739

2018 2019 2020

Current Ratio Quick ratio Gearing ratio Cash ratio

Figure 4. Deliveroo’s 2018-2020 Solvency Analysis

148
 Advances in Economics, Business and Management Research, volume 211

Deliveroo’s current and quick ratios have been stable However, the growth rate has become quite sharp over
at around 1.5 in recent years, indicating good asset the last 3 years and the differentiations between them are
liquidity. This means that Deliveroo’s own capital is not very large.
only able to sustain its daily operations, but also has a
relatively substantial debt servicing capacity. 4.1.2. UK Food Takeaway Industry Revenue
Deliveroo’s debt ratio has remained relatively stable
in recent years. It increased significantly in 2019, mainly 5900
because its total assets grew at a much slower rate than
4800
its total liabilities. By 2020, it had decreased, mainly due 4200
to a significant increase in total assets and a decrease in 3500
3200
total liabilities. However, it remains largely at around 0.7, 2600
indicating good solvency and the company’s ability to
control its loan leverage risk
Deliveroo’s cash ratios are generally at a declining
level, with weakening liquidity. During 2018-2019, this 2015 2016 2017 2018 2019 2020
is caused on the one hand by increased financing
activities, business and earnings growth, and on the other Figure 6. UK Food Takeaway Industry Revenue-USD
hand by the combined effect of increasing current ($) $ in Millions [14]
liabilities year on year, generating reduced cash flows in
later years. In 2019-2020, current liabilities decrease, This graph illustrates the revenue of UK food
while the ratio reverses. takeaway industry from 2015 to 2020. The numbers are
also in an upward trend, and the differentiation between
4. COMPARISON WITH COMPETITORS 2019 and 2020 is much larger than others from $ 4800
million to $ 5900 million.
The comparison of Deliveroo with competitors can
illustrate the situation of Deliveroo’s current 4.2. Deliveroo
development status with an intuitive and quantitative
representation. From these different tables and figures, 4.2.1. Deliveroo’s App Users
the App user scale, the revenue, the market capitalization
and many other characteristics of Deliveroo can be 7.1
understood and estimated directly. 6

4.1. UK Food Takeaway Industry 3.9

3.1
4.1.1. UK Food Takeaway Industry App Users

24.8
19.9 2017 2018 2019 2020
17.6
13.6 14.4 15.5 Figure 7. Deliveroo’s App Users-in Millions [15]

As a member of UK food takeaway industry,

Deliveroo’s development track was in line with the
development trend of the industry. The number of app
users is in an upward trend while growing a little slower
2015 2016 2017 2018 2019 2020 in 2020. However, the number of 2020 is more than twice
of that of 2017, which indicates that Deliveroo has got a
Figure 5. UK Food Takeaway Industry App Users-in great development over these years.
Millions [14]

As an emerging industry closely related to people’s

life, the food takeaway industry has developed rapidly
over the past few years. From the bar graph above, the
number of UK food takeaway industry app users is in an
upward trend and the growth rate is becoming larger. It is
obvious that the first 3 years have a quite slow growth
rate and very small differentiations between them.

149
 Advances in Economics, Business and Management Research, volume 211

4.2.2. Deliveroo’s Revenue while the number had a little decrease in 2020,
approximately from 30% to 28%.
1200
4.3.2. Proportion for Revenue

771

476
2885 3132
277 2474 2328 2846
1647
129
18
771 1200
2015 2016 2017 2018 2019 2020 129 277 476
18
Figure 8. Deliveroo’s Revenue-GBP (£) £ in Millions 2015 2016 2017 2018 2019 2020
[15] Deliveroo Other UK Food Takeaway Companies
The bar graph demonstrates the growing status of Figure 10. Proportion of Deliveroo in the UK Food
Deliveroo’s revenue from 2015 to 2020. The upward Takeaway Industry for Revenue [14, 15]
trend of these numbers indicates that Deliveroo’s
operation status has become better over these years. The It is obvious that the proportion of Deliveroo to the
revenue of 2020 is much larger than 2019, and the whole industry in revenue was in a drastic upward trend
differentiation of them is nearly 430 million pounds. during the period from 2015 to 2020, approximately from
1% to 28%. The growth rate was also becoming sharper,
4.3. Deliveroo and the UK Food Takeaway which indicates that Deliveroo is boosting its
Industry development speed.

4.3.1. Proportion for App Users 4.4. Deliveroo and Direct Competitors in UK

4.4.1. Deliveroo and Direct Competitors’ App

Users
12.4 13.7 13.9 17.7 66
60

38
3.1 3.9 6 7.1 31.4
26
21 2122.6
2017 2018 2019 2020 14.5 1517.7
9 6 7.1
3.1 3.9
Deliveroo Other UK Food Takeaway Companies

Figure 9. Proportion of Deliveroo in the UK Food 2017 2018 2019 2020

Takeaway Industry for App Users [14, 15] Deliveroo Just Eat Uber Eats Grubhub

Compared with other companies in the UK food Figure 11. Deliveroo and Direct Competitors’ App
takeaway industry, the percentage of Deliveroo to the Users-in Millions [15, 16, 17, 18]
whole industry in app users increased from 2017 to 2019,

150
 Advances in Economics, Business and Management Research, volume 211

70

60

50

40

30

20

10

0
2017 2018 2019 2020

Deliveroo Just Eat Uber Eats Grubhub

Figure 12. Changes of Deliveroo and Direct Competitors’ App Users-in Millions

As a young company established in 2013, Deliveroo’s happened in 2020, and Just Eat got a large increase in app
scale of app users is much smaller than its direct users, just a little smaller than that of Uber Eats.
competitors in UK - Just Eat, Uber Eats and Grubhub.
However, these 4 companies were in a great development 4.4.2. Deliveroo and Direct Competitors’
in app user scale, promoting the development of UK food Revenue
takeaway industry. The largest differentiation was

3524

2100

1447
1300 1322
1187 1200
990
779 791 771
545 447 508 476
277

2017 2018 2019 2020

Deliveroo Just Eat Uber Eats Grubhub

Figure 13. Deliveroo and Direct Competitors’ Revenue-GBP (£) £ in Millions [15, 16, 17, 18]

151
 Advances in Economics, Business and Management Research, volume 211

4000

3500

3000

2500

2000

1500

1000

500

0
2017 2018 2019 2020

Deliveroo Just Eat Uber Eats Grubhub

Figure 14. Changes of Deliveroo and Direct Competitors’ Revenue-GBP (£) £ in Millions

From the figure 13 and 14, Deliveroo had a smaller revenue over the 4 companies, having a much sharper
revenue than other 3 direct competitors, largely due to its growth rate than others in 2020.
later establishment time. However, the future prospects
of it may be very great that the numbers of Deliveroo and 4.5. Top 10 Food Takeaway Companies in the
Grub hub in 2020 are similar, which indicates that World
Deliveroo’s development speed is becoming higher year
by year. Uber eats was the most fast-growing company in
Table 1. Revenue and Market Capitalization of Top 10 Food Takeaway Companies in 2020 [3]

2020 Revenue - USD ($) $ in Millions Market Capitalization - USD ($) $ in Billions

DoorDash 900 16

Grubhub 1310 6.92

Uber Eats 1460 56.8

Postmates 1000 1.85

Instacart 2000 14

goPuff 246 1

ChowNow 1000 1.25

Deliveroo 365 7.1

Meituan-Dianping 13710 197.44

Seamless 85 6.92

152
 Advances in Economics, Business and Management Research, volume 211

14000

Revenue - USD ($) $ in Millions

12000
10000
8000
6000
4000
2000
0
0 20 40 60 80 100 120 140 160 180 200
Market Capitalization - USD ($) $ in Billions

DoorDash Grubhub Uber Eats Postmates

Instacart goPuff ChowNow Deliveroo
Meituan-Dianping Seamless

Figure 15. Bivariate Scatter Plot of Top 10 Food Takeaway Companies in the World

This scatter diagram shows the situation of the top 10 Internet, has certain Internet attributes, i.e., it needs to
food takeaway companies over the world in revenue and invest heavily in the early stage to sink into the market to
market capitalization. It is obvious that Meituan- attract more loyal users in order to form a scale effect and
Dianping has the largest market capitalization and annual make a significant rise in profitability later on. There is
revenue in 2020, which mainly serves for Chinese market. no doubt that Deliveroo is in the process of converting
Uber Eats’s market capitalization is much larger than the from the early stage to the late stage of realisation, and
remaining companies, while the revenue of which is the initial results are relatively good. In the mid to late
similar. In comparison, the revenue and market stages, the synergies and scale effects will be released,
capitalization of the remaining companies are clustered and its profitability will be greatly enhanced.
in the same range, which indicates that the competition
between them may be very fierce since they have similar 5.2 Risks
scales and profitabilities
From the perspective of company nature and industry
5. DISCUSSION development, Deliveroo mainly faces three risks:
Technology, Competitors, and Gig economy.
5.1. Future Prospects Deliveroo’s business depends on its network
infrastructure. Deliveroo also relies on third-party
Deliveroo has a strong growth profile. Deliveroo’s technology and communications systems to provide
total revenue has been on an upward trend over the past access to the platform for consumers, partner restaurants
three years. Although Deliveroo’s overall profitability and riders. Technology and Deliveroo’s reputation for
has been poor over the past three years due to its status as service are closely related. In the event of attacks on the
a newly listed company and significant investment in third-party technologies and mobile networks or natural
market expansion, it has gained momentum and as disasters, consumers’ orders will be affected and
Deliveroo grows and expands into new businesses the Deliveroo will inevitably lose business, thus negatively
company will have the opportunity to achieve greater affecting its service reputation. Therefore, Deliveroo
profitability in the future as scale and synergies are needs to spend a lot of money on maintaining websites
unlocked. and applications every year to ensure that the existing
The market is now a monopoly, so Deliveroo is technology can make the business run smoothly and users
investing in innovation to expand its market share and have a good experience.
develop new businesses: membership subscriptions and The British takeaway market share is huge, and huge
grocery retailing, etc., so that it can continue to explore profits have attracted many competitors to enter the
new sources of profit growth and greatly reduce the market to participate in the competition. As the
plummeting profits caused by unhealthy competition forerunner, Deliveroo’s position is even more threatened
with competitors in the face of powerful competitors. Low barriers to entry
Deliveroo, as a leading company in the emerging in the industry have led to a large influx of competitors
industry relying on big data, cloud computing and the into the market. The same business model and the

153
 Advances in Economics, Business and Management Research, volume 211

services provided also reduce the differentiation of it can be inferred from the growth trend of the market
Deliveroo. The third-party platform does not belong to share that Deliveroo may gradually catch up with and
Deliveroo alone. Therefore, consumers, partner surpass in the future with the continuous improvement of
restaurants and riders can switch service platforms at will. its takeout service and the diversification of service
The low switching cost also reduces the competitiveness content.
of Deliveroo. At the same time, the bargaining power of
In the analysis of Deliveroo, although its financial
partner restaurants and riders becomes higher. Therefore,
situation is poor and it may be difficult to improve its
Deliveroo uses a pricing model to modify its marketing
revenue and market scale in the short term, Deliveroo still
strategy, to provide partners with commission discounts
has great rising space and development potential in the
and benefits, and to provide consumers with discounts
long term. However, the financial analysis of Deliveroo
and promotional activities to stimulate consumers to
focused too much on its financial performance results and
spend. At the same time, Deliveroo also expands grocery
to a certain extent neglected the long-term value creation
delivery services, cooperating with local chain stores
of Deliveroo, without considering in depth the analysis of
with scale and influence, such as PARKnSHOP in Hong
other factors besides operational performance, such as the
Kong and Sainsbury in the UK.
impact of customers, COVID-19, etc.
The risks of the gig economy make Deliveroo face
legal restrictions and moral pressure from society. The REFERENCES
risk in the gig economy is that self-employed gig workers
cannot obtain corresponding labour rights, and there are [1] Food delivery and takeaway market in the UK |
grey areas in the industry [19]. The outside world also Statista. Statista. (2021). DOI:
believes that delivery platforms such as Deliveroo cannot https://www.statista.com/study/36742/takeaways-
protect the labour rights and personal safety of riders, and in-the-united-kingdom-uk-statista-dossier/.
disputes between riders and platforms will become [2] En.wikipedia.org. 2021. Deliveroo - Wikipedia.
normal. In response to this situation, Deliveroo uses a DOI: https://en.wikipedia.org/wiki/Deliveroo.
third-party insurance mechanism to provide riders with
personal accident, illness and public liability insurance. [3] Bizvibe Blog. 2021. Top 10 Best Food Delivery
With the improvement of the relevant laws for gig Apps in the World 2020, Top Food Delivery Apps.
employment in the UK, Deliveroo also actively seeks the DOI: https://blog.bizvibe.com/blog/best-food-
help of relevant legal professionals to avoid risks and delivery-app
reduce losses under legal restrictions.
[4] Deliveroo. (2021). Deliveroo expands Waitrose
grocery partnership | Deliveroo plc. Ir.design-
6. CONCLUSION
portfolio.co.uk. DOI: https://ir.design-
Nowadays, Deliveroo is seeking a balance between portfolio.co.uk/viewer/28/12683.
interests, business ethics and the law, because the [5] Lock, S. (2020). Food delivery and takeaway market
increasingly perfect labor laws and progressive social
in the UK. DOI:
environment have brought many challenges to Deliveroo.
https://www.statista.com/study/36742/takeaways-
If Deliveroo does not make a complete strategy to deal
in-the-united-kingdom-uk-statista-dossier/.
with changes in the industry, Deliveroo will face a more
severe industry environment in the future. And Deliveroo [6] Deliveroo plc. Q1 Trading Update. (2021). DOI:
has successfully imprinted its own service and brand https://dpd-12774-s3.s3.eu-west-
awareness into customers’ minds and their daily lives and 2.amazonaws.com/assets/7716/1846/5940/Delivero
has become customers’ first choice in the food delivery o_plc_-_Q1_trading_update_RNS_-
industry. Deliveroo, as a start-up company in the internet- _15_April_21.pdf.
based takeaway industry, needs to invest heavily upfront
in order to be profitable at a later stage. Although its ROE [7] Mintel. (2016). Attitudes towards Home-Delivery
performance is not good at the moment, this does not and Takeaway Food - UK - April 2016 - Market
make it an unpromising company, and the synergies Research Report. DOI:
between the scale of Deliveroo’s upfront investment and https://reports.mintel.com/display/747922/
the completion of its new business expansion could lead [8] Cox, J. (2018). Deliveroo crashes as punters are
to explosive earnings growth in the future. For the time
charged three times and takeaways vanish. The Sun.
being, its financial position is sound and Deliveroo is not
DOI:
a major risk to itself in the short term. From the
https://www.thesun.co.uk/tech/7357583/deliveroo-
comparison of Deliveroo and its direct competitors in the
crashes-app-down-uber/.
UK food takeaway industry, it is obvious that Deliveroo
is still weak compared with the old takeaway companies, [9] Goodfellow, J. (2017). Deliveroo to build ‘one of the
though it is in a leading position in the industry. However, UK’s largest tech hubs’ as it creates hundreds of jobs

154
 Advances in Economics, Business and Management Research, volume 211

in new London office. The Drum. DOI:

https://www.thedrum.com/news/2017/01/18/deliver
oo-build-one-the-uk-s-largest-tech-hubs-it-creates-
hundreds-jobs-new-london
[10] Williams-Grut, O. (2021). Yahoo is now a part of
Verizon Media. Uk.news.yahoo.com. DOI:
https://uk.news.yahoo.com/deliveroo-share-price-
ipo-stock-090158359.html.
[11] the Guardian. (2021). Deliveroo riders denied rights
to collective bargaining, court told. the Guardian.
DOI:
https://www.theguardian.com/business/2018/nov/1
4/deliveroo-riders-rights-court.
[12] BORDEN, N., 2021. Guillaumenicaise.com. DOI:
http://www.guillaumenicaise.com/wp-
content/uploads/2013/10/Borden-1984_The-
concept-of-marketing-mix.pdf.
[13] nme.com. 2021. 30% Off In September 2021 |
Deliveroo Promo Codes | NME. DOI:
https://www.nme.com/discount-
codes/deliveroo.co.uk
[14] Business of Apps. 2021. Food Delivery App
Revenue and Usage Statistics (2021). DOI:
https://www.businessofapps.com/data/food-
delivery-app-market/#2.
[15] Business of Apps. 2021. Deliveroo Revenue and
Usage Statistics (2021). DOI:
https://www.businessofapps.com/data/deliveroo-
statistics/.
[16] Business of Apps. 2021. Just Eat Revenue and
Usage Statistics (2021). DOI:
https://www.businessofapps.com/data/just-eat-
statistics/.
[17] Business of Apps. 2021. Uber Eats Revenue and
Usage Statistics (2021). DOI:
https://www.businessofapps.com/data/uber-eats-
statistics/.
[18] Business of Apps. 2021. Grubhub Revenue and
Usage Statistics (2021). DOI:
https://www.businessofapps.com/data/grubhub-
statistics/
[19] Botsford, P. (2021). UK Supreme Court finding
against Uber answers questions posed by gig
economy. Ibanet.org. DOI:
https://www.ibanet.org/article/675B7997-AAA5-
42AF-9B2A-57CD7378CB4C.

155