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December 3, 2020

Grocery delivery is now Deliveroo’s fastest-growing business segment

By Robert Scammell

On-demand grocery delivery is now the fastest-growing part of Deliveroo’s business, CEO Will Shu has said.

Deliveroo launched grocery deliveries in March when the UK entered its first lockdown and has since partnered with retail chains M&S, Aldi, Waitrose, Sainsbury’s and others.

Speaking at online technology conference Web Summit, Shu said: “On-demand grocery is a new service but it’s the fastest-growing part of our business. It’s already 10% of our UK business within months and we see huge potential for this ahead as well.”

Shu described scaling up Deliveroo grocery deliveries as the startup’s “main innovation” for consumers during the pandemic at a time when some were unable to leave the house and others were unable to book online shopping delivery slots with supermarkets.

Restaurants forced to close during the pandemic turned to Deliveroo’s network of freelance delivery drivers to drop off takeaways and groceries ordered via the Deliveroo app.

This extra demand helped Deliveroo become “profitable at the operational level” for the past six months, Shu said.

In August the Daily Telegraph reported that Deliveroo swung to a profit just months after it warned the UK’s competition regulator that it could go bankrupt.

This warning paved the way for the Competition and Markets Authority to approve an investment from ecommerce giant Amazon, which took a 16% stake.

The UK-headquartered company has been loss-making since it launched in 2013 as it pursued an expansion strategy around the world. It now operates in 12 markets globally.

Shu also believes that the pandemic has “accelerated consumer adoption” of food delivery services “by about two or three years”.

He said that Deliveroo will “aggressively expand” investment in delivery-only kitchens, also known as dark kitchens, in 2021.

The company currently has 32 of these kitchens, called Deliveroo Editions.

“What the pandemic has done is [to] evolve [delivery-only kitchens] from a nice to have expansion play for restaurants to a really fundamental part of restaurant strategy,” he said.

Deliveroo is expected to go public early next year at a valuation as high as £3bn. The startup recently hired Claudio Arney as its new chair ahead of the hotly anticipated market debut.

Read more: From dark stores to drones, what’s next for on-demand delivery?