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Malcolm Gledhill

Inside the UK’s Fast-Growing Restaurant Delivery Industry

by Malcolm Gledhill | Dun & Bradstreet Editor

July 19, 2016 | No Comments »

It seems everyone is hungry for a slice of London’s fast-growing food delivery scene. What began in the early 2000s with Just Eat’s online marketplace approach to takeaway food has evolved into the latest spinoff of the “sharing economy” — Airbnb and Uber remain the best-known examples.

Deliveroo is the UK’s biggest restaurant food delivery company, provides restaurants with a ready-made delivery network, and has generated fast-growing revenue of £250 million. It is now a familiar sight to see Deliveroo couriers traversing the streets of London by bike or moped with big Deliveroo-branded thermal boxes strapped to their backs. The company launched in 2014 and partners with courier cyclists, much in the same way that Uber partners with drivers, to ferry orders from restaurant chains and independents across town to the customer’s doorstep.

The company’s clever mix of logistical innovation and back-end sophistication has opened up delivery options for well-loved chains and restaurants that haven’t traditionally offered delivery. It counts popular, zeitgeisty chains like Nando’s, Pho, and Gourmet Burger Kitchen among its client base. The likes of Just Eat and German rival Delivery Hero are comparatively limited by the traditional, low-end takeaway fare offered by their restaurant network — Indian, Chinese, fried chicken, and pizza predominate.

But Deliveroo is far from alone. Myriad competitors have sprung up in the last couple of years, in the shape of Hungryhouse, GrubHub, Henchman, Take Eat Easy, Jinn, and Supper, to name a few. The density of population and wealth in London has made the city a prime location for prospective companies looking to tap into a rich seam of growth. The market is crowded, and that’s not even reckoning on the arrival of two small firms named Uber and Amazon.

Uber, the ride-sharing company, launched UberEats in London this June, and while it currently lags Deliveroo in terms of restaurants covered (2,500 in London vs. 150), Uber has muscle on its side. Its approach is to aggressively undercut Deliveroo: Deliveroo claims an average order time of 32 minutes; Uber promises to deliver in less than 30 minutes and will grant a £20 discount if it’s late in the first month after launch. Deliveroo charges a £2.50 delivery fee (and £2 extra for orders under £15); Uber delivers free at launch and has no minimum delivery.

Likewise, Amazon is rolling out restaurant delivery via its Prime Now delivery service. The retail giant will try to win on cost. Its market approach is likely to involve leveraging its intimidating ubiquity to charge restaurants a high fee (rumored to be 27.5%) while forbidding restaurants from passing the cost onto the customer by raising prices, as well as charging no delivery fee.

For Uber, its entry into restaurant food delivery can be seen in the context of its ambition to own the logistics spectrum of the sharing economy. It aims to leverage its strong base in moving people to places and to expand into the realm of moving food to people.

For Amazon, naturally it’s about the retail context. Amazon wishes to be every customer’s first port of call when they desire to buy something, and in 2016 that has extended to food. As well as restaurant food delivery, the retail giant has entered the UK’s highly competitive online grocery market. Its Amazon Fresh service launched in the UK in May (initially in select London postcodes only), and Amazon can be assured of even tougher competition than in restaurant delivery in the shape of grocery delivery pioneer Ocado and the “Big Four” UK grocers — Tesco, Sainsbury’s, Asda, and Morrisons.

What’s next for the industry? Consolidation, probably, as some of the smaller companies are swallowed up. And it remains to be seen whether or not Uber and Amazon stick with it for the long haul or if their entries into restaurant delivery fall under the “fail fast, fail often” Silicon Valley mantra. But if there’s one thing that’s a certainty, it’s that restaurant delivery is here to stay.


Malcolm Gledhill is Dun & Bradstreet’s expert on the European marketplace. Malcolm joined Dun & Bradstreet’s Macro Market Insight team in 2014 before moving to the Company team in 2016, and has a BA from the University of Southampton.

Photo by Rich Huxley, used under a Creative Commons license.

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