RE: ‘They’re stealing our customers and we’ve had enough'26 Apr 2021 14:03
I think one thing that long term investors here need to get their head around is that the path to profitability for Deliveroo long term is to take more and more of a percentage from each customer's transaction and there is only two ways Deliveroo can realistically achieve this:
- Reduce the percentage paid to the rider
- Reduce the percentage paid to the restaurant
By doing either of the above, they will publicly end up screwing over the very partners they spend so much on PR trying to convince that they help and "work with" and this will raise very serious ethical problems in the future.
Long term the way this company becomes profitable is to deliver the food by drones or robots and cut out the rider, taking the percentage cut from the rider and boosting Deliveroo's profit margin / order.
Deliveroo also will reduce/eliminate the restaurant's percentage cut by increasing the percentage of orders that are fulfilled through editions "dark kitchens". In theory Deliveroo could take complete control of "dark kitchens" and reap all of the restaurant's percentage, but in reality they will have “partners” that willing to accept the lowest margins, while Deliveroo take the lions share. Deliveroo have the data and restaurants continue to willingly give this up, so this is all going to plan for them so far.
The long term problem with investing into this company is when restaurants and riders realise how badly they are getting shafted and what the resulting public outcry will be. It is one thing for Amazon to destroy our high streets, but the connection that the public has with restaurants goes much deeper to a primal level vs shops and when people realise that Deliveroo is killing the restaurant scene, not helping it I wouldn't want to be invested in this company.
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