Deliveroo’s losses ballooned to £317.7 million (€348m) in 2019, up by a third from the previous year, as the food delivery company grappled with competition and regulatory scrutiny before the pandemic boosted it to profitability.
The figures were revealed in Deliveroo's 2019 accounts, which were filed to the UK's Companies House registry on Monday. They also show that revenues increased 62 per cent over the year to £771.8 million.
The accounts come as the London-based company is said to be readying for an initial public offering (IPO) early next year.
The scale of its 2019 losses forced Deliveroo to take out a loan of £198 million as a protracted investigation by the UK's competition authorities into a planned $575 million investment led by Amazon squeezed its finances.
The provider of the short-term loan, which Deliveroo said was "extinguished" when the Competition and Markets Authority approved the Amazon deal in August this year, was not disclosed.
The company said it had £179.2 million in cash and equivalents at the end of 2019, including the proceeds of the loan.
The accounts also reveal that Deliveroo took a £43.4 million impairment charge in 2019 after it shuttered its German and Taiwanese businesses.
This year Deliveroo has said it turned profitable on an operating basis in the second and third quarters. It was now profitable in 11 of its 12 markets, it said, without naming the region where it was still losing money.
Shuttered restaurants
“Covid has accelerated strong underlying trends, and there is an enormous opportunity ahead,” said Will Shu, Deliveroo’s co-founder and chief executive.
As coronavirus lockdowns have shuttered restaurants, online food delivery businesses in Europe such as Deliveroo, Uber Eats, Just Eat Takeaway and Delivery Hero have boomed.
Deliveroo has signed up several supermarkets, including Waitrose, Sainsbury's, Aldi and Carrefour, broadening its range beyond restaurants into grocery delivery.
That had helped boost both the number of people using Deliveroo and how often they place orders, the company said, while 140,000 restaurants were now listed on its apps in almost 800 towns and cities. The company added 46,000 new restaurants in 2020, compared with 62,000 in 2019.
However, some restaurants have complained that Deliveroo has sought to increase its commission even as they have been forced into new lockdowns.
Texas Joe's, a London-based barbecue restaurant that has worked with Deliveroo since 2014, said on Monday that it had received an email from the company warning of a potential increase in its commission from 25 to 35 per cent.
Deliveroo’s email, which arrived just a day after London was put into a Tier 4 lockdown that forces restaurants to close to in-house dining, cited a 2016 contract that the 25 per cent commission was dependent on exclusivity. Texas Joe’s had recently experimented with Uber Eats in what its manager JD Walters called “a means of survival”.
Higher fees
While Deliveroo has agreed not to enforce the higher fees pending further discussion, Mr Walters said it had been “beyond shocking” to receive the email during what he described as an “existential crisis” for restaurants during the pandemic.
“The reality is that their business model is so flawed that it’s impossible for anyone to make actual money on it,” he said.
– Copyright The Financial Times Limited 2020
