Pre-tax losses at Deliveroo widened to £147mn in the first half of the year, as the food delivery company warned consumers were being hit by cost of living pressures and ordering fewer drinks and side dishes.
The London-based food delivery app on Wednesday said it completed 160mn orders in the first six months of 2022, up 10 per cent compared with a year ago, with revenues rising 12 per cent to just over £1bn. Its pre-tax losses were £95mn in the first half of 2021.
But gross transaction value (GTV) — a measure of the orders placed through its platform — per order fell 3 per cent in the first half of the year.
The company also reported a rise in staffing costs, driven partly by employing more people in its technology team. Marketing and overhead costs rose 29 per cent to £368.8mn in the first half of the year, compared with £286.2mn in the same period a year earlier.
Food delivery platforms boomed as people stayed at home during coronavirus lockdowns but the sector has been struggling to pick back up as Covid-19 restrictions have eased, while rising inflation has put pressure on budgets, driving people to cut down on takeaways.
“People are ordering maybe one less drink, trading down [on items] . . . Maybe they get a cheaper burger or something like that,” said Will Shu, founder and chief executive of Deliveroo.
Deliveroo’s results come a month after it slashed its full-year growth forecasts on the back of “increased consumer headwinds”. It expects growth for its full-year GTV to be between 4 and 12 per cent on a constant currency basis, more than halving its previous estimate of between 15 and 25 per cent.
Deliveroo on Wednesday said GTV growth slowed to 2 per cent in the second quarter of this year, compared with 12 per cent in the first three months, due to consumer headwinds.
Monthly active users increased 4 per cent to 7.8mn consumers, compared with the same period last year but declined slightly between the first and second quarters of this year, which the company said was due to reduced marketing and the macroeconomic climate. Shares in Deliveroo were up 4 per cent on Wednesday morning.
The company said it was considering exiting the Netherlands in November, saying it lacked a “strong local position” after almost seven years in the area. Deliveroo shut down its business in Spain in November 2021 but is expanding into Qatar over the next few months.
The results come as Lord Simon Wolfson, chief executive of Next, announced he would step down from the Deliveroo board effective at the end of Wednesday. He joined about 18 months ago, in his first external directorship in 30 years, and said the role was “no longer compatible” with his other commitments.
Deliveroo’s shares have struggled since its flotation in 2021, when about £2bn was wiped off the company’s market value on the first day of trading, and are down by more than 50 per cent in 2022.
Its competitors have also been hit by the slowdown in consumer spending. Just Eat Takeaway last week wrote down the value of its US subsidiary Grubhub by €3bn, slashing its value by almost half just a year after buying the food delivery group as it contends with strained consumer budgets and stiff competition.
Image and article originally from www.ft.com. Read the original article here.