Deliveroo meets top growth forecast as dining in trend stays intact

01/20/2022 | 08:05am

LONDON (Reuters) -British food delivery company Deliveroo hit the top of its forecast for 60-70% growth in gross transaction value in 2021 after GTV rose by more than a third in the fourth quarter despite a tough yearly comparison when new lockdown restrictions were coming into force.

Food delivery boomed during the COVID-19 pandemic when pubs and restaurants were closed, and the popularity of the platforms has not faded since hospitality reopened.

Deliveroo founder and Chief Executive Will Shu said the performance was "really encouraging", although he cautioned that the first quarter of 2022 would be the hardest comparison because many of its markets were in full lockdown in the first three months of 2021.

He said the average order value of 21.40 pounds ($29.12) in the fourth quarter was down 5% year on year, reverting back to pre-COVID levels. However it was slightly up on the third quarter and the frequency of orders from its 8 million active monthly customers had increased to 3.4 per month, from 3.3 in the third quarter.

"We feel good about the consumer engagement side," he said in an interview.

The company was also not struggling to recruit riders, he said, despite competing opportunities in other sectors because they valued the flexibility on offer.

Deliveroo, which competes with the likes of Uber Eats and Just Eat Takeaway, said it grew market share as it improved its customer offer, including more grocery options, which accounted for 8% of GTV in the second half of 2021.

Shares in Deliveroo, which have lost more than half of their value since listing at 390 pence in March 2021, were trading up 2.6% at 174 pence on Thursday.

The company, which has yet to make a profit even as demand has boomed, said it maintained its guidance for gross profit margin as a percentage of GTV at 7.5-7.75%.

Shu said he would guide on 2022 when the company reports full-year results in March, and he would also talk about the longer-term path to profitability.

"This is a giant market that's still in its infancy," he said. "We're going to invest where we see appropriate, but we have got to do that with increasing levels of efficiency."

($1 = 0.7348 pounds)

(Reporting by Paul Sandle; Editing by Kate Holton and Susan Fenton)

By Paul Sandle

© Reuters 2022
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