Deliveroo sales keep growing despite cost-of-living crisis

Deliveroo inches closer to profitability as margins improve on rising value of the food delivery group’s orders

  • The takeaway platform revealed its GTV increased by 8% year-on-year to £1.7bn
  • Demand for takeaways has slowed in 2022 as consumers returned to dining out 
  • Deliveroo expects GTV to grow by 4-8% on a constant currency basis this year

Deliveroo has continued to boost the overall value of sales, even as weaker economic conditions cause customers to make fewer purchases.

The takeaway platform revealed its gross transaction value increased by 8 per cent year-on-year to £1.7billion in the three months ending September, with growth in the British Isles outpacing international revenues.

Orders declined modestly to 72.8 million, with expansion in the UK and Ireland being offset by sliding demand in the Asia-Pacific region following the loosening of coronavirus restrictions.

Expansion: The takeaway platform revealed its gross transaction value increased by 8 per cent year-on-year to £1.7billion in the three months ending September

Deliveroo also said the fall in orders reflected the traditional slowdown in European markets during the summer months and increasing consumer pressures leading people to cut back on takeaways.

But the monetary value of average orders was up 9 per cent thanks to restaurants and retailers hiking prices in response to growing food and drink costs and the ‘continued optimisation’ of service fees.

Demand for takeaways has slowed significantly in 2022 as consumers returned to dining out at hospitality venues, having been prevented from doing so during strict lockdown periods.

In the third quarter of 2021, 7.3 million monthly orders were made on Deliveroo’s platform, an 82 per cent jump on the same time the previous year.

Despite a substantial enlargement in the number of restaurant partner sites and tie-ups with the likes of McDonald’s, pharmacy chain Boots and WH Smith, orders per month were only 1 per cent higher.

With many countries now expected to fall into recession and inflationary pressures putting a squeeze on disposable incomes, takeaway deliveries look likely to weaken further in the coming months. 

Victoria Scholar, the head of investment at Interactive Investor, said: ‘Deliveroo was very much a poster child stock of the stay-at-home pandemic trend in 2020 with supercharged demand for takeaways during lockdowns when restaurants and bars were forced to shut.

‘However, the economic reopening and the cost-of-living crisis have dented demand for its non-essential offering.

‘Financial markets have also been unkind to leveraged tech stocks this year, given the global shift towards higher interest rates and the end of the era of cheap money.

On a constant currency basis, Deliveroo now expects GTV to grow by 4 to 8 per cent this year, which is at the lower end of its previously declared forecast range. 

Notwithstanding this, the business has upgraded its profit outlook, forecasting an adjusted underlying earnings margin of minus 1.2 to 1.5 per cent of GTV, compared to minus 1.5 to 1.8 per cent previously.

Founder Will Shu said: ‘Throughout 2022, we have been adapting financially to the operating environment and driving forward on our path to profitability…We continue to be excited about the opportunity ahead and our ability to capitalise on it.’ 

Deliveroo shares were up 4.9 per cent to 86p on late Friday morning, although their total market capitalisation has plummeted by more than £6billion since a disastrous initial public offering in March last year.