Deliveroo, the food delivery app, has quickly become one of the most popular food delivery services in the UK and other countries.
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What does Deliveroo do?
Deliveroo's core functions include the following:
- partnering with local restaurants to offer a wider variety of food options to customers;
- running a network of delivery riders to pick up and deliver orders to customers;
- developing and maintaining an online platform for customers to place orders and track their deliveries.
How does Deliveroo work?
Customers can access Deliveroo's online platform through their website or mobile application. They can browse the available restaurants and menus and order the desired food items. Deliveroo's network of delivery riders will pick up the order from the restaurant and deliver it to the customer. Deliveroo also offers a live tracking feature, allowing customers to see the progress of their orders and know when to expect delivery.
How Deliveroo makes money
Deliveroo makes money by charging commission to restaurants, delivery and service fees, subscriptions for Deliveroo Plus, the Deliveroo Editions dark kitchen business, and Deliveroo for Work.
Deliveroo charges a commission to the restaurants for each order placed through its platform. According to the most recent information, the commission charge structure (in their home market, the UK) is £2 pickup charge + £1 delivery fee + variable distance fee determined by the app. The balance is paid to Deliveroo.
Deliveroo charges customers a delivery fee for each order placed through its platform. The delivery fee is variable, based on your location. Restaurant owners report Deliveroo charges them a 20% commission fee per completed order. This generates a whopping revenue, given that Deliveroo has over 35,000 registered establishments.
Deliveroo charges a service fee disclosed at checkout and calculated per order before applying promotions or discounts.
Small order fee
Deliveroo adds a fee if the total order value is less than the restaurant's minimum, encouraging customers to add more to their basket to avoid the fee.
Deliveroo offers a subscription-based service called Deliveroo Plus which gives customers exclusive deals and discounts. For a flat monthly fee, customers get free delivery from participating restaurants.
Deliveroo Editions are dark kitchens, i.e. restaurant kitchens without a dine-in front-of-house service. They are a way for Deliveroo to have more control over the customer experience and can also be a way for restaurants to expand their reach without opening a physical location. Deliveroo invests in the success of Editions restaurants with bespoke kitchens designed for any cuisine, made available in return for a cut. Deliveroo also covers the cost of upkeep, provides marketing support, and dedicates a growth manager to each Editions restaurant.
Deliveroo for Work
Deliveroo also offers a service called Deliveroo for Work, which allows companies to order food for their employees or clients. Whether it's work meals, team perks, or catered events, businesses pay Deliveroo to cater their business events.
Future growth engine
- International expansion. Deliveroo is already present in many countries but has a lot of room for growth in other countries.
- Acquisition. Deliveroo has made several acquisitions of other food delivery companies, which helps to expand its reach and offerings.
- Improved service offering. Deliveroo can continue innovating and improving its service offering to attract and retain current customers.
There is no shortage of competitors in the food delivery market.
- Just Eat. A British online food delivery company also partners with local restaurants to offer customers various food options.
- Uber Eats. The food delivery service from ride-hailing giant Uber. It operates in many markets like Deliveroo and has a similar business model.
- GrubHub. US-based online food delivery company that operates in many cities across the United States.
- Foodpanda. Berlin-based online food delivery company operates in many countries worldwide, including Asia and Eastern Europe.