Deliveroo Business Model | How Does Deliveroo Make Money?

Company: Deliveroo
Founders: Will Shu, Greg Orlowski
Year founded: 2013
Headquarter: London, United Kingdom
Valuation: £1.5Billion
Annual Revenue: £470 Million

Products & Services: Food Delivery, Restaurant Listings, Restaurant Reviews + Insights
Competitors: Just Eat, Grub Hub, UberEATS,

Table of Contents

Introduction to Deliveroo

Roofoods Ltd. (Deliveroo) is a British online food delivery company, originally founded by Will Shu and Greg Orlowski in 2013. The company started domestically with only a few listings and generated low revenues. It wasn’t until 2015 that Deliveroo revenue grew exponentially to approx. £18 Million during the 3rd year. In 2016, revenues grew to £128 Million and were recognized as one of the fastest-growing companies in Europe.

Deliveroo took another growth that doubled in 2017, with revenues of £227 Million, a 116% + increment since the launch of its operations. William Shu was the first Deliveroo delivery driver. Mr. Shu spent approximately 6 hours driving around in the suburbs of Chelsea in Central London. Deliveroo is yet, another software application that has succeeded in the food delivery business, expanding its operations to international sectors. The company has helped boost the UK financial economy, responsible for generating a total of £470 million ($582 million) in revenues, and has created over 7,200 restaurant-related jobs across the nation.

The following consists of the full Deliveroo Business Model Canvas report, an in-depth review of its business structures, and Deliveroo daily operational protocols.

Deliveroo Business Model Canvas (Roofoods Ltd.)

1. Deliveroo Key Partners

Deliveroo’s key partners are responsible for its exponential growth. The following partners helped the company bridge and established business goals and milestones;

Riders as a collaborators

1. - In about three years, Deliveroo gained about 30,000 riders.
  - William Shu was the first Deliveroo delivery guy. He spent approx—six hours driving around the suburbs of Chelsea in Central London.
  - Riders play an essential role in the functionality of the business. The riders are responsible for fulfilling an order within their jurisdiction/ designated area.

A network of high-quality local restaurants

Deliveroo’s entire concept revolves around the very idea of providing local and domestic users with unique listings of high-quality private restaurants within such areas or jurisdiction.

1. - Users will not be able to find any low-quality restaurants and nor will any low-quality restaurants be able to list their restaurants.

Technology Providers and Advancements

1. - Deliveroo the technological spectrum is crucial. The majority of its revenue is derived from technology, such as phone applications and Deliveroo official website.
  - Riders as a collaborators

Partnership with local restaurants

1. - Another strategic factor that serves Deliveroo is its ability to build partnerships with a vast range of high-quality restaurants

2. Deliveroo Key Activities

The following are Deliveroo’s daily core operations and protocols that are proceeded on a daily basis;

Optimize Logistics

1. - Developers are continuously improving the logistics processing systems, improvising new technological advances in restaurant POS systems to encourage and promote sufficient order flow and synchronization.

Delivery Operations

1. - The platform form offers delivery services for all customers (corporate, individual groups, private)

Global expansion endeavors

1. - One of the objectives of the business is to grow and expand its outreach and create additional revenue channels by providing its services in other countries and regions.

3. Deliveroo Value Propositions

Devilveroo value propositions are designed to offer benefits to those individuals that utilized that platform in the following;

1. - Restaurant availability for everyone, quickly and sufficiently.
  - Providing an effective way to order food from Users favorite restaurants
  - The platform provides a delivery service for restaurants.
  - Riders can earn extra income and exercise at the same time.

4. Deliveroo Customer Relationships

Currently, Deliveroo is in the process of enforcing a better user interface for exceptional customer experience. So far, the system offers the following to Users and Drivers alike;

Local- yet high graded food delivery from reputable restaurants

1. - The platform promotes users to review and order from local food restaurants that offer delivery and takeout.
  - That even includes those restaurants that do not do delivery but may offer takeout only.

Fast and reliable delivery

1. - Deliveroo aims to deliver all orders under a 32-minute window-frame.
  - Deliveroo is known for an exceptional delivery time, with the flexibility to get your deliveries sent to your home, office, or anywhere else desired.

Order from high-quality takeaway restaurants that do not offer delivery

1. - The platform promotes high-quality takeaway listings, thus including those restaurants that do not deliver.

Accessibility

1. - Accessibility is highly important since many of Deliveroo customers happens to order through means of using an application or through the original website.
  - Providing applications and other mediums like the website make ordering food convenient.

Convenience

1. - The platform is designed for users to access and use the application or the website conveniently and easily without any difficult navigations required.
  - With the user-friendly interface, users and restaurant owners alike can use the platform with ease to means of self-servicing.

Easy Self-service

1. - The platform is designed for users to access and use the application or the website conveniently and easily without any difficult navigations required.

Automated System

1. - Most automation systems are backed and maintained by external sources. Credit card Payment terminals are perfect examples.

Deliveroo Plus Subscription Service

1. - Subscription service is available for residents of the United Kingdom.

5. Deliveroo Customer Segments

The Deliveroo application offers a platform for both the consumer and the supplier. Therefore it is a platform that has become appropriate for everyone;

1. - A customer that order for takeaway
  - Accounts with Corporate titles
  - Premium Featured Restaurants
  - Riders that request support

6. Deliveroo Key Resources

One of the most crucial aspects of the Deliveroo business model is its ability to build insightful resources that help to improve the functionality of the business, create further business endeavor opportunities, and strengthen its value propositions for better user experience on both ends; driver and user interface.

Website Platforms and Applications

1. - Deliveroo’s proprietary software platform allows restaurant owners and users to easily signup and register.
  - The automated payment gateway terminals associated with the website make payments easy and automated.

Delivery team

1. - One of the greatest assets of Deliveroo is the empowerment of its own fleet management system.
  - Technically, anyone with a bike or a registered (with insurance) scooters are eligible to become a Deliveroo rider.
  - The very fact that Deliveroo riders work through their own means of transportation and conveyance, the additional expense towards vehicles, cars, or other forms of conveyance isn’t required, thus saving additional expenses for Deliveroo.

Data analyst Specialists

1. - Data analysts experts help to build relevant information that can be used to further develop and innovate structures of the business for further progress and improvement.
  - The data is also utilized for technological development and advancements.

Engineers & Developers + Research

1. - The collective team of software engineers works continuously to improve the functionality of all the platforms that are owned by Deliveroo.
  - Research managers ensure to deploy research towards industries and potential marketplaces to ensure qualifying partnerships to bridge and associate with Deliveroo and its standards.
  - Research managers further deploy additional research that helps to identify local restaurant insights about the food business, trends, etc.…

Unique Food Packaging

1. - Deliveroo developers took considerable steps to design a food packaging bag system that would ploy the advantage of keeping the food at its original temperature for as long as possible.
  - Integration to restaurant POS systems

Integration and communication bridged with restaurants with tablet-based, point-of-sale order management terminals. (POS systems)

7. Deliveroo Channels

The following are Deliveroo modes of channels and alternative platforms to access Deliveroo;

1. - Software application for Smartphone/tablets
  - Blog site
  - Social media platforms and other social channels
  - Software application for Smartphone/tablets
  - Business development team for restaurants

8. Deliveroo Cost Structure

All though Deliveroo have not shared too much information about its cost expense structures, the following are just basic structures that are considered for Deliveroo;

1. - Marketing expenses
  - Automation expenses
  - Platform development and maintenance
  - Labor expenses
  - Customer support + operations expenses
  - Internal salaries + Administration expenses
  - A flat fee of £2.50 for delivery
  - A commissions gained from restaurants
  - Deliveroo Plus – a flat monthly subscription for food deliveries (UK)
  - Deliveroo Premium – a flat monthly subscription for food deliveries (UK)

9. Revenue Stream

How Does Deliveroo Make Money?

Like many businesses, Deliveroo business model is structured under a commission + fee-based layout. Revenues are generated through the combination of multiple businesses. API’s and channels that help produce the main streams of its business.

The following are the channels that help Deliveroo generate its revenues.

Deliveroo Drivers / Riders Signup Upfront Fees

Based on the latest update commission fee structure:

1. - £2 pickup fee + £1 delivery fee + variable distance fee, which is calculated by the software application system itself. The rest is paid to Deliveroo.
  - Those individuals that are interested in working as a driver with Deliveroo are required to make an upfront payment of £150 as a security deposit alongside downloading the Deliveroo Driver application.

That security deposit is utilized to provide drivers/riders with the required gear. The total amounts are deducted from their payouts. Drivers/riders are able to claim that money back when they decide to leave or resign from the position.

With the upfront payments for acquiring the Deliveroo gear, Deliveroo is able to generate additional signup funds through the interested drivers/riders.

1. - As per to Financial Times, it is believed that there are approx. 20,000 registered riders, which means that Deliveroo was able to harvest £3 Million in security deposit reserves.
  - This amount is further invested throughout the business structures for further improvement. Ideally, Deliveroo is able to recover and return the £150 for each driver/rider at the time of resignation. Therefore there isn’t any loss involved.
  - Drivers are able to make up to £120+ daily (this depending on the number of deliveries they make)
  - Drivers get to keep their tips if offered by customers.
  - Drivers get a £250 bonus for each referral.

Registered Restaurants that sell through Deliveroo

1. - Deliveroo refuses to reveal the actual commission structures that they take from restaurants; however, a number of restaurant owners claim that there is a 20% commission fee that Deliveroo takes from them per order completed.
  - There are about 35,000 restaurants that are registered with Deliveroo.

Buyers / Shoppers

1. - Deliveroo has a total of 45,000 users daily in the UK
  - 80% of a solidified loyal user who will not change or switch their services or applications (users in the UK are most likely to continue using the services with Deliveroo, increasing the revenue streams for Deliveroo.

Investment Partners

- Deliveroo has generated revenue of £470 million ($582 million in revenue to partner restaurants and their supply chains in the UK
- Deliveroo Investments and Funding
- The Series F (US fund managers T. Rowe Price – $385 Million
- DST Global – $200 Million
- General Catalyst
- Index Ventures – $25 Million
- Accel Partners
- European Unicorn – $860 Million
- Raised $385 Million in new funding, total values of $2 Billion

Conclusion

Deliveroo is a unique food delivery application that has become successful due to the design of its business structure and the core functionality and operations that it serves and provides.

Deliveroo’s secret of success lies in the hands of key partners and the key activities that helped to build its customer base and streamline the advantages that the Deliveroo platform came with.

In conclusion, Deliveroo will continue to build new partnerships across new regions and sectors, increasing its sales volume, users, credibility, and establishing a global presence.

References & more information