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Food delivery service Deliveroo is planning a major expansion in the U.K. after securing $575m in funding from Amazon.com Inc. and other investors.
London-based Deliveroo has raised $1.5bn in venture capital since it was founded in 2012 and its self-employed riders have become a familiar sight in many large cities. It now wants to reach half of the U.K.’s population of 65 million by the end of the year, up from the 33 percent who can currently use its mobile app, said Chief Executive Officer Will Shu.
“We are going to go into the suburbs, go into the smaller towns,” Shu told Bloomberg Television’s Caroline Hyde at Bloomberg’s Sooner Than You Think technology conference in London on Wednesday. Deliveroo first targeted larger cities as their higher population density makes food delivery more commercially viable.
The industry has become highly competitive, with dozens of companies offering restaurant delivery ordering through mobile apps. Venture capitalists put $3.5bn into food and restaurant delivery startups in 2018 alone, according to data from Pitchbook. In the U.K., Deliveroo competes with Uber Technologies Inc.’s Uber Eats and Just Eat Plc. Amazon recently wound down its own food delivery service in the U.K. and the U.S. after failing to win significant market share.
Shu, a former Morgan Stanley investment banker, said that with Amazon’s recent investment in Deliveroo, he hopes to tap the e-commerce giant’s operational and logistics expertise. “Amazon in my view are the best operators in the world and, to the extent we can learn from them and what they’ve been able to build over the last 20 years, that is what I’m most excited about,” he said.
While bikes and scooters would be the primary forms of transport used for deliveries for the foreseeable future, Shu said he could see Deliveroo orders being made by Amazon’s fleet of delivery drones one day.
Shu said Deliveroo would continue to expand in the other 13 markets where it has a presence, including France, Italy, Spain and Dubai. The company’s Italian business is currently its fastest-growing operation, he said.
He also plans to expand Deliveroo’s “Editions” dark-kitchen concept — mobile cooking facilities that a restaurant can use to prepare food solely for delivery customers. The approach allows restaurants to add new business without needing to lease a traditional restaurant space.
While Deliveroo helped pioneer this idea, others have followed suit. Uber co-founder and former CEO Travis Kalanick has funded Los Angeles-based City Storage Systems (CSS), a company that runs dark kitchens. CSS, which operates under the CloudKitchens brand in the U.S., recently acquired FoodStars, a company that runs dark kitchens throughout London.
Shu said he was “agnostic” on the idea of Deliveroo holding a public stock offering in the near future. The most important thing, he said, was that the company can access capital to fund its growth and, if the private market can continue to supply that money, he saw no immediate reason to take Deliveroo public.
“We want the ability to invest heavily to achieve our goals,” Shu said. “Whether that is public or private doesn’t matter.”
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