Langton eats Deliveroo

Langton looks at……….Deliveroo:

Replete as it is with Generation Y talent, Langton Capital looks to have its finger on the pulse of the evolving UK restaurant industry. It was this commitment to the cause in mind, coupled with an unwavering passion for burgers, which led the team to sample the food on offer at online delivery service Deliveroo this weekend. The London-based tech company hit the headlines this summer after raising $70m in its series C funding round, having seen daily orders increase by some 500% since its last £16m fundraising in January.

Deliveroo teams up with restaurateurs in search of additional revenue streams — all that’s required to establish the service from the branded food chain’s perspective is a tablet and a Bluetooth printer, both of which are provided by Deliveroo. The online delivery firm takes care of all the packaging, deliveries, bookings and even the setting up of an online menu, deriving its revenue through the flat £2.50 delivery fee (which drops to £2 for orders under £15) and commission from its restaurant partners. The platform works with over 2,000 different locations including Gourmet Burger Kitchen, MEATLiquor and The Real Greek.

With the likes of Greenoaks Capital, Accel Partners and Hoxton Ventures providing it with the capital for future growth, Deliveroo is now expanding into France, Germany and Ireland as well as the Middle East and Asia (according to the very busy CEO William Shu). The firm seeks to differentiate itself from Just Eat and Hungry House by delivering branded restaurant food (as opposed to the ‘mystery meat’ vendors sometimes found on Just Eat) to the consumer. Its website says that the average Deliveroo order takes just 32 minutes to reach your front door, for a fixed delivery fee of £2.50.

The group’s online profile is growing fast but still lags its more established rivals. Worth mentioning is its lack of an app on Google’s Play Store and the fact that its iOS app was only launched in August – mobile and tablet app stores are a key battleground here and its performance along these metrics will be a useful gauge for the company’s growth going forward:

So, in the name of research Langton dutifully ordered burgers all round from trendy Hoxton-based MEATmission for the reasonable sum of £47.50. The Deliveroo driver reached our equally trendy Aldgate office 10 minutes earlier than expected with said burgers (and chicken wings, and chips, and cans of coke). Langton can confirm that the food was good (with the exception of McDonald’s-style lukewarm chips) and, all things considered, provided MEATmission with business which we would otherwise have taken to the nearby Sainsbury’s.

Langton would argue that, for the branded restaurant chain looking for additional income streams, Deliveroo provides access to customers who would otherwise have spent their money elsewhere. Operating costs are presumably low as the delivery service does most of the leg work, and the promotional potential of the partnership stands to increase one’s customer base, rather than cannibalise existing sales. Jack Brumby jack.brumby@langtoncapital.co.uk