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Deliveroo losses surge as rising orders lift delivery rider costs

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Deliveroo weighs Netherlands exit as delivery platform’s losses surge amid recent technology hires and rising costs

  • The food delivery platform saw first-half losses climb by 44% to £153.8m
  • Orders on Deliveroo’s platform rose to 160.9m between January and June 
  • Takeaway businesses have been experiencing a serious slowdown in orders

Deliveroo losses have widened as a major jump in staff and delivery rider costs offset continued growth in orders and revenues.

The food delivery platform saw losses in the primary six months of the yr climb by 44 per cent to £153.8million against the identical period in 2021, as its sales costs and administrative expenses climbed significantly.

Though its gross profits reached the £300million mark, they were outpaced by a rise in overheads, primarily driven by the corporate hiring more employees for technology roles.

Widening loss: Food delivery platform Deliveroo saw losses in the primary six months of the yr climb by 44 per cent to £153.8million against the identical period in 2021 

Costs were also impacted by an increase in aggregate rider costs to fulfil the growing variety of orders, which rose by 10 per cent to 160.9 million between January and the tip of June.

The full value of orders processed by the firm – often known as gross transaction value – expanded by 12 per cent, at constant currency levels, in the primary quarter but only 2 per cent in the following three months.

Takeaway businesses have been experiencing a slowdown in orders following the loosening of lockdown restrictions across the globe and the reopening of hospitality venues like pubs and restaurants.

In recent months, though, worsening inflationary pressures have further damaged trade as cash-strapped consumers have in the reduction of on non-essential spending.

Deliveroo told investors on Wednesday that it could soon begin consulting on proposals to finish operations within the Netherlands, where it derives only one per cent of its gross transaction value (GTV).

It claimed that remaining within the country would ‘require a disproportionate level of investment, with uncertain returns’ to try to attain a dominant market position.

By comparison, the group has gained additional market share within the British Isles, where it earns roughly half its orders and a majority of its revenues.

Deliveroo has enhanced its scope within the UK and Ireland by forging or extending recent partnerships with supermarkets, including Asda, Sainsbury’s and Waitrose, in addition to high street retailers WHSmith and LloydsPharmacy.

Nonetheless, the London-based business has didn’t turn a profit ever because it was arrange in 2013 by American-born Will Shu and Greg Orlowski, and its shares remain around two-thirds below their IPO price. On Wednesday, Deliveroo shares climbed 7.4 per cent to 98p.

Shu said: ‘Deliveroo is committed to delivering profitable growth…To date in 2022, we now have made good progress delivering on our profitability plan, despite increased consumer headwinds and slowing growth in the course of the period.

‘We’re confident that in H2 2022 and beyond, we’ll see further gains from actions already taken, in addition to advantages from recent initiatives.’

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