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On-demand groceries now account for 11% of Deliveroo revenues

Image courtesy of Deliveroo/Sainsbury's

On-demand grocery deliveries accounted for 11% Deliveroo revenues in the first half of its financial year – up from 9% a year earlier. 

The fast delivery company, founded in 2013 by Will Shu and Greg Orlowski to deliver takeaways, now delivers from about 8,000 grocery sites in the UK and and more than 10,000 sites in 10 international markets including Europe, the Middle East and Asia. In 2022 its UK and Ireland business launched with Asda and expanded partnerships with Waitrose, Sainsbury’s and the Co-op. It also works with health and beauty retailer Boots, which now delivers via Deliveroo from 125 stores. 

In other markets, it continued to roll out partnerships with Carrefour in France, Italy and Belgium, Esselunga in Italy and ParknShop in Hong Kong.

The update came as London-based Deliveroo reported full-year revenues of £1.97bn in the year to December 31 2022. That’s 13.8% up on the previous year. It reported a pre-loss of £230.6m, narrowing from a loss of £281.8m a year earlier.

Deliveroo founder and chief executive Will Shu says: “Our team has delivered in difficult market conditions, with continued growth and share gains in our key markets. I’m particularly pleased that the company reached adjusted EBITDA profitability in the second half of last year. This is a significant step on our path to sustainable cash generation, and we achieved this milestone a year earlier than our guidance by executing our strategy successfully despite headwinds from the market environment.

“The macroeconomic outlook for the year ahead remains uncertain, but our record in the past 12 months makes me optimistic about our ability to adapt and continue to deliver on our plans to drive profitable growth.”

Improving the grocery experience

Deliveroo says that as well as expanding the choice of grocers that it delivers from it is also “making step changes in the grocery experience”. Shoppers can now substitute items that not available and and see where traders are matching in-store prices.  Merchants, meanwhile, are trialling a new picking app designed to “help with productivity at a time when labour is a major headache for grocers”, says Deliveroo in its full-year statement.

Delivery-only Hop grocery sites, similar to dark stores, are growing in number while the business is also experimenting with Hop as a Service – enabling grocers to use the Hop technology on their own sites with their own staff to pick and pack orders that are then delivered by Deliveroo riders in as little as 10 minutes – faster than the company’s standard target of delivering in as little as 30 minutes. 

Deliveroo says in today’s full-year statement: “The model allows grocers of all sizes to offer ultra-fast delivery, with rapid pick times and more accurate inventory monitoring. During 2022, we have witnessed the pressures on the pure-play quick commerce industry with funding drying up and players merging. For us, we have always believed Hop is a service that belongs on a platform with a wider network – given the pre-existence of lower-cost deliveries and consumers. We have made significant progress on profitability of our Hop model and are confident in its role on our marketplace.”

Deliveroo now operates in 10 markets, having exited Australia and the Netherlands in November 2022, and the majority of its business is in delivering from food from restaurants, By the end of 2022 it had about 158,000 partner restaurants, up from 130,00 a year earlier. During the year it expanded its delivery-only kitchen partners to more than 380.

In 2022 it had an average of 7.4m customers a month (+6% year-on-year) who ordered an average of 3.4 times a month. However, average fourth quarter customer numbers were one percentage point lower than a year earlier, at 7.4m, reflecting what the company describes as “the challenging macroeconomic environment”. 

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