Takeaway giant Deliveroo posted a pre-tax loss of 298 million pounds for the year due to high spending in the rapid growth plans. It suffered a loss of 213 million pounds in 2020, a year before.
The London-headquartered company revealed its plan is to touch the breakeven level in the period of the next two years. The revenues in 2021 were mainly from the fees paid by customers and restaurants that amounted to 1.8 billion pounds, an increase of 57 percent compared to a year ago.
Deliveroo benefited from its UK business as orders jumped by 72 percent. It said the heavy losses were due to heavy spending in technology improvement and marketing the brand to keep the momentum that was witnessed during the Covid pandemic restrictions.
The transaction value in 2021 was 6.6 billion pounds with a jump of 67 percent and it was mainly driven by an increase in orders by 73 percent.
Deliveroo was founded by Will Shu in 2013 and lately added about 19,000 sites of restaurants on its UK platform. Moreover, the grocery operation was boosted and expanded to about 6,000 sites.
However, Deliveroo is predicting a gross transaction slowdown in 2022 due to rising inflation amid the Russian invasion of Ukraine. Shu said they will follow closely the developments and he is proud of the company's 2021 performance.
He added that the UK and Ireland performance is encouraging as the company has continued to grow its market share and profitability was achieved on the basis of adjusted earnings even though the environment was highly competitive.
Shu seems optimistic, but Dan Lane, a senior analyst at Freetrade, said profitability is a long way off for the company. The growth is followed at a significant cost even if the market share and transaction value look promising.
He added shareholders look for progress and not on how much the company has invested in marketing and it has reciprocated as punishment to the profits.
Moreover, it is a worry that how many loyal customers may turn up after Covid and what will be the impact on it due to growing inflation. It is true market spending needs to be high to remain ahead in the competition.
Deliveroo currently has 160,000 restaurant sites on its platform and is equipped with more than 180,000 riders. It operates in 11 markets including Australia, France, Belgium, Italy, Hong Kong, Netherlands, Singapore, United Arab Emirates and Kuwait.