Covid should have been a boon for Deliveroo – but it still hasn’t turned a profit| Jonathan Nunn
The company is going public but there’s only so long food delivery apps can survive on convenience alone
In a year when entire industries have collapsed, food delivery apps seem to have had an easy ride. The revenues of Uber Eats overtook those of the company’s taxi service; Just Eat merged with the Dutch firm Takeaway.com, and then bought the US app Grubhub; and Deliveroo snagged a $575m Amazon investment, managing to squeeze a sliver of operating profit from the toothpaste tube of its business model. This week Deliveroo went public with its IPO, which the company initially hoped would result in a valuation of somewhere close to £8bn.
But look closer and there is a persistent niggle about the apparent success of food delivery apps. In a year when everyone has been stranded at home and grown tired of their own cooking after a week,delivering food to people should be like playing the pandemic on “easy mode”. But Uber Eats isn’t raking it in –it’s just losing less than it did a year ago,while the pre-tax losses of Just Eat, a business that used to be profitable, jumped 67% in 2020. Meanwhile Deliveroo’s shares crashed by 30% within the first 20 minutes of its listing on the London stock exchange.
