Cutting the Cake: Deliveroo Announces Intentions for IPO​


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By Curtley Bale​


The Story

Deliveroo has announced its intentions to raise money via an Initial Public Offering (IPO), confirming it would do so in London. The IPO is expected to be worth around £7 billion but the date for the offering has yet to be set. This news comes off the back of the reporting season for Deliveroo, which has seen sales rise by 54% but has also seen losses of £223.7 million, partly a result of the company's continued investment in geographic expansion and technology (BBC). Deliveroo is looking to take market share from competitors such as Just Eat and Uber Eats, as the food delivery market has ballooned during the pandemic.

What It Means For Businesses and Law Firms

Encouraging results have seen Deliveroo generate £1.2 billion in revenue in 2020, and the company has highlighted expansion as a key business goal. There are two main options here: either attract new customers or grow the volume of its current customers’ orders.

Deliveroo plans to steadily grow to ensure there are delivery options to cater for every single one of the 21 meal slots in a person’s week (Deliveroo). Deliveroo’s IPO may also be a way to gain further international recognition, and perhaps move into other markets such as the US, India or China. Currently, Deliveroo operates in twelve markets, but to expand beyond this, the company may find it needs to pursue alliances with existing companies present in the region (Financial Times). This strategy was employed by Just Eat as they merged with GrubHub to gain traction in the US.

As for Deliveroo’s competitors, Just Eat is deemed to be the biggest threat in the UK. In terms of market share, Just Eat occupies 44% of the market, with Uber on 30%, and Deliveroo on 26% (Edison Trends). Deliveroo has been taking market share away from its competitors recently due to the pandemic and the shift towards remote working. With profit margins tighter in cities, Just Eat and Uber were able to dominate the space, pushing Deliveroo further towards the residential, suburban areas. Here, however, the volume of orders has increased 10%, with families ordering larger takeaways than the central office workers. This mirrors the trend in America where the same happened to DoorDash. Deliveroo will hope that this trend will see similar results as DoorDash in the US, as the company has fought back against Uber and GrubHub to dominate the market, with around 50% market share (Financial Times).

Deliveroo is hoping to be available in over 66% of the UK by the end of the year (Financial Times). This coverage is necessary to battle Just Eat and Uber, both of which have coverage across more of the UK. Providing Deliveroo can capitalise on its pandemic gains, the company certainly has a chance of causing its competitors a serious headache.

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