Deliveroo Business Model: How Deliveroo Works & Make Money?

Online food delivery has gained huge popularity over the last decades and combines two things: comfort and instant access. Most people prefer to use an online food delivery platform like Deliveroo to order hot and ready-to-eat food. The online food delivery market size has reached around 130.8 billion in 2022, it’s expected to grow at 13.2% of CAGR between 2023 and 2028. The market is forecasted to increase and reach around USD 275.22 billion by 2028.

Looking at the growing food ordering and delivery market many are choosing to develop an app similar to Deliveroo. Deliveroo is a British online food delivery company that has satisfied the hunger of millions of customers.

If you are thinking of building an online food-ordering app like Deliveroo for your business you have made the right decision. But before moving ahead have deep insight into the Deliveroo business model, how the online platform works, makes money, and more.

What is Deliveroo?

Deliveroo is the best-rated online food delivery company launched in 2013 by Greg Orlowski and Will Sh in London, England. The company operates in France, the United Kingdom, Italy, Belgium, Ireland, the United Arab Emirates, Kuwait, Singapore, and Hong Kong.

Deliveroo formerly operated in the Netherlands, Australia, Germany, Taiwan, and Spain. In 2021 the company stated that it desired to reach break-even and become more profitable in half of 2023 or the first half of 2024. Deliveroo Editions operates Dark Kitchen, its subsidiary operation, for the preparation of delivery-only meals.

Deliveroo HOP operated from delivery-only grocery stores managed by Deliveroo, working in partnership with grocers. The company also provides delivery and technology for online grocery to major retailers in the UK. The company was listed on the London Stock Exchange in 2021 as Deliveroo Holdings plc. In 2022, Deliveroo announced that the company experienced 70% growth in Gross Transaction Value year-on-year in constant currency.

Success History of Deliveroo

Trade Name: Deliveroo

Company Type: Public limited company

Industry Served: Online food ordering and Food delivery

Founded Year: 2013

Headquarters: London, England, UK

Revenue: £1,824 million

Number of Employees: Around 3,108

Couriers: More than 110,000 self-employed couriers

Website: deliveroo.co.uk

Deliveroo breaks profits in the second half of 2022 even though the orders drop. The company had surgical demand during the COVID-19 spread, which boosted the orders and profit of Deliveroo to 6% to 1.8 billion pounds ($2.2 billion), as the rise in restaurant prices offset a 2% in orders.

Deliveroo has gained huge popularity among food lovers and satisfied their hunger during the pandemic. Besides food delivery, the company started grocery delivery to cater to the growing demand during the lockdown. The successful Deliveroo business model has impressed many, let’s explore more.

Deliveroo Funding History and IPO Details

In 2014, Deliveroo raised around £2.75 million series A investment round from Hoxton Ventures and Index Ventures, as well as an assortment of angel investors. In series B funding in 2015, Roofoods Ltd which was doing business as Deliveroo received around US$25 million.

The funding round was led by Accel with participation from Hoxton Ventures, Index Ventures, and Hummingbird Ventures at an estimated valuation of $100 million. Deliveroo provides deliveries for 750 restaurants. In series C, it secured $70 million in investment from Greenoaks Capital and Index Ventures, marking Deliveroo’s third funding round in a year.

In Series D Funding in 2015, Deliveroo raised around $100 million, and $275 million in 2016 from the hedge fund Bridgepoint. In 2017, the food delivery upstart Deliveroo added $385 million and $98 million, bringing the Series F round total to $480 million.

In Series G in 2019, Deliveroo raised $575 million in the funding round led by Amazon, increasing the total to $1.35 billion. In 2021, the company raised a $180 million Series H round, bringing the total raised to date to $1.53 billion.

Deliveroo Business Model: How the Takeouts and Grocery Delivery Platform Works?

Deliveroo delivers takeouts and essential groceries from local partners straight to customers’ doors on their demand. Deliveroo was started with a basic model of offering customers quick services on a neighborhood-by-neighborhood level. The takeout and grocery delivery platform enables customers to order needed things from nearby stores and get them delivered to their doorsteps.

The company integrated an aggregator strategy with a logistics and marketplace model to build a hyperlocal on-demand business model. The updated business model helped the company to deal with the problem of poor and low-rated restaurant delivery.

The company was started with the aim to satisfy customers’ on-demand needs now operating in more than 12 counties. The company has partnered with 170,000+ restaurant and grocery partners and 180,000+ supporting riders to deliver groceries and hot meals without any delay.

How Deliveroo Works?

The Deliveroo business model operates on a dual partnership model which combines logistics and an aggregator model. The company has partnered with many restaurants, grocery stores, and delivery persons to deliver groceries and food to customers’ doors on time. The workflow of the platform can be summarized as below:

• Customers can download apps for iOS and Android or can browse the website to find what they are looking for.
• After downloading the app users can register on the platform, set locality, and search for nearby stores.
• Customers can choose the items and check the payment before completing the checkout process.
• Stores accept the delivery request and prepare the delivery.
• A delivery person gets the request once the order is ready for delivery.
• The delivery provider delivers the item to the customer’s doorstep and collects payment.
• Customers can then rate the service and delivery provider as per their experience gained.

Deliveroo Revenue Model: How the Food Delivery Company Makes Money?

Deliveroo revenue reached an all-time high in 2021, it was measured at around 1.82 billion British pounds , a growth from the previous year’s 1.16 billion. The takeout and grocery delivery app uses a brilliant monetization strategy of earning money. Deliveroo has added lots of revenue sources to its revenue strategy, let’s explore each one by one.

Commission on Delivery Orders

Deliveroo charges a commission on restaurant orders. The company charges around 25 to 45% per order. The charges differ based on restaurant locations, agreements, and more. On-boarding restaurant fees are one more revenue channel through which the delivery platform makes money.

Deliveroo Plus Subscriptions

Users can easily subscribe to Deliveroo Plus and receive extra benefits from using the platform. The benefits are free delivery on above £10, special offers, all-time customer services, and a seven-day free trial.

Deliveroo for Corporates

Any business owner or corporates can easily compose food requests for their employees or team. It enables synchronizing food budgets and fixing the budgets. Employees can order from the eateries via mobile apps. The order benefits will be divided among the Deliveroo and diners.

Deliveroo Editions

Deliveroo has launched the concept of Deliveroo Editions in its business-driving eateries in various countries, Ghost Kitchens. It prepares on-demand food and has no habitual premises for a dine-in facility. Deliveroo has also launched Helicopter Dining, providing meals to customers 1000 ft above the air.

Get Ready to Launch Your App Like Deliveroo Today!

A Deliveroo business model and workflow are flexible and can be beneficial to all delivery businesses. The future of the food and grocery delivery business is noteworthy, hence starting a business similar to Deliveroo is a smart decision.

As the market has numerous opportunities for food and grocery startups, you can build an app similar to Deliveroo. If you want to launch successfully then White Label Fox can provide you with the best development services. Get in touch at [email protected]

Frequently Ask Questions

What Is Deliveroo?

Deliveroo is a popular online food delivery platform that connects customers with local restaurants and food vendors. It allows customers to order meals and have them delivered by independent riders, offering a convenient solution for both food lovers and restaurants.

How Does Deliveroo Work?

Deliveroo operates by enabling customers to browse through a wide range of restaurants and food options via its app or website. Once an order is placed, a nearby rider picks up the food from the restaurant and delivers it to the customer’s address. The company uses an advanced algorithm to ensure efficient delivery routes and minimize wait times.

What Is the Deliveroo Business Model?

Deliveroo follows a commission-based business model. It charges restaurants a commission fee for using its platform, and customers pay a delivery fee. The company also generates revenue through service charges and premium subscription plans like "Deliveroo Plus," which offers free delivery for a monthly fee.

How Does Deliveroo Make Money?

Deliveroo generates revenue through several streams:

• Commission from Restaurants: A significant portion of its income comes from the commission fees it charges restaurants for listing their menu items on the platform (usually 15%–30% per order).
• Delivery Fees: Customers pay a delivery fee based on the distance, demand, and location.
• Service Fees: A service charge is added to customer orders to cover operational costs.
• Subscription Plans: Deliveroo offers a subscription service called Deliveroo Plus, which provides free delivery for a monthly or annual fee.

What Are the Key Features of Deliveroo?

Key features of the Deliveroo app include:

• Real-Time Tracking: Customers can track their orders in real-time, including the rider’s location.
• Payment Options: Deliveroo supports multiple payment methods, including credit/debit cards, PayPal, and mobile wallets.
• Subscription Plan: Deliveroo Plus offers perks like free delivery for subscribers.
• Wide Restaurant Network: The platform partners with thousands of restaurants, cafes, and eateries.
• Customization: Users can customize their meals or order specific menu items from restaurants.

How Does Deliveroo Ensure Food Quality?

Deliveroo ensures food quality by partnering only with reputable restaurants. Additionally, the company provides customer feedback mechanisms, allowing users to rate their experience and food quality. This helps Deliveroo maintain quality standards and address any issues quickly.

What Are the Delivery Options Available with Deliveroo?

Deliveroo offers a variety of delivery options to cater to different customer needs:

• Standard Delivery: The typical delivery option where customers get their food within a set time frame.
• Click & Collect: This allows customers to pick up their orders from the restaurant, bypassing the delivery service.
• Scheduled Delivery: Customers can choose a specific time for their food delivery, offering more flexibility.

Is Deliveroo Available Globally?

Deliveroo operates in several countries, including the UK, Australia, Spain, France, and parts of the Middle East and Asia. While it has a global footprint, its services are not yet available in all regions. The company is continually expanding into new markets.

What Makes Deliveroo Different from Other Food Delivery Services?

Deliveroo differentiates itself from competitors through:

• Focus on High-Quality Restaurants: It has exclusive partnerships with top-tier restaurants, offering customers a premium selection of meals.
• Efficient Delivery System: Deliveroo uses an algorithm that optimizes delivery routes, ensuring faster delivery times and reducing costs.
• Innovative Features: Features like the ability to schedule delivery times or pick up orders from restaurants set Deliveroo apart from others in the market.

What Are the Challenges Faced by Deliveroo?

Despite its success, Deliveroo faces challenges such as:

• Competition: The online food delivery space is highly competitive, with major players like Uber Eats, Grubhub, and Just Eat vying for market share.
• Profitability: Deliveroo has faced challenges in reaching profitability, with high operational costs, including rider payments and restaurant commissions.
• Regulation and Labor Issues: Deliveroo has encountered issues with the classification of its delivery riders as independent contractors, facing regulatory scrutiny in various countries.