British food delivery company Deliveroo aims to break even in two years

A Deliveroo delivery courier drives through London, Britain, March 31, 2021. REUTERS/Toby Melville

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  • Positive base earnings observed in 2023 or 2024
  • Difficult economic environment to slow growth in 2022
  • Shares up 8%, still well below 2021 quote level

LONDON, March 17 (Reuters) – Britain’s Deliveroo (ROO.L) charted a path to profitability on Thursday, saying it would break even in about two years as the proportion of revenue spent on marketing in the competitive sector of dwindling food delivery.

The company, which competes with Just Eat and Uber Eats, remained cautious about the near-term outlook, anticipating slower growth as the economic environment deteriorates for consumers and its restaurant partners.

The company forecast a 15% to 25% increase in gross transaction value (GTV) on its platform this year, a slowdown from 70% in 2021 when shutdowns spurred its first half.

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“When we look at all three sides of our market – runners, traders and the consumer – we see headwinds, mainly coming from inflationary pressures,” chief executive Will Shu told Reuters.

“We’re setting a cautious outlook for 2022, but overall we’re very, very excited about the future.”

Deliveroo recorded a 57% increase in revenue to £1.82bn on £6.6bn in orders, but its adjusted base loss widened to £131.4m from £10.8m books, reflecting investments in technology and increased marketing spend to increase awareness and acquire new customers.

Deliveroo, which is expanding its grocery delivery service and catering business, said it aims to break even at adjusted core earnings in the second half of 2023 or the first half of 2024, and achieve a positive margin of 4% by 2026.

Deliveroo shares, which have lost more than two-thirds of their value since listing at 390p in March 2021, were trading up 8% to 126p.

Bernstein analysts said forecasts for this year were potentially disappointing, but longer-term forecasts and news were positive.

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Editing by William Schomberg and Edmund Blair

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