Deliveroo’s food parcels hit European roadblocks

An inability to turn a profit has seen food app Deliveroo abandon certain European markets, including Germany, to focus elsehwere. (AFP)
Updated 14 August 2019

Deliveroo’s food parcels hit European roadblocks

  • Restaurant home-delivery app finds life on the continent difficult to swallow

LONDON: Striking French couriers. Spanish court setbacks. The white flag of surrender raised over Germany.

British food delivery company Deliveroo — its boxy lime-blue bags a welcome sight for legions of office workers across London — is hitting sudden bumps along other European roads.

The rough times come as a growing group of startups jostle for the pocketbooks of hungry city dwellers craving special burgers and bento boxes.

Deliveroo has helped revolutionise meals on wheels in much the same way as Uber — which has a rival food catering app — has upended the taxi market.

It is now encountering identical questions over whether its employment schemes meet labor laws across around 200 cities where it has set up shop.

Its tens of thousands of delivery workers — most of them young men on bikes and scooters — are officially self-employed and deprived of a minimum wage or paid leave.

They must also provide their own means of transportation and smartphones that keep them connected to both clients and dispatchers.

This arrangement prompted Deliveroo’s French bikers to call for clients to boycott the brand last week.

Discontent in Deliveroo’s second-biggest market after the UK boiled over only days after a Madrid court ruled that it had wrongly signed up more than 500 riders as self-employed contractors.

Deliveroo has appealed the ruling but faces several more similar cases in Spain later this year.

These cost-cutting contracts are being tested at a turbulent time for a new service that is booming in popularity but unable to turn a profit.

Deliveroo announced Monday that it was pulling out of Germany after four years and refocusing on other parts of Europe and further afield in Asia.

The decision was especially painful because it clears the path for a local rival called Lieferando to dominate Germany on its own.

Lieferando is owned by the Dutch company Takeaway — itself in the process of merging with the UK-based upstart Just Eat.

“Consolidation has come to the hyper-crowded food delivery space,” Euromonitor International research group analyst Maxine Vogt said.

“There are at least two dozen companies in the restaurant ordering and delivery business. And that doesn’t even include grocery delivery!”

Scale and size are essential for these rivals to forgo immediate profits as they pile money into expansion that could eventually force the laggards to drop out.

Deliveroo remains an investor darling that has made it into one of the world’s few “unicorns” — privately-owned tech companies valued at more than a billion dollars by the market.

It has even piqued the interest of Amazon.

The Seattle-based online shopping behemoth was the biggest investor in a round of fundraising in May that brought in $575 million.

The various investments and mergers show that “scale is the only way to survive,” Vogt said.

But they also come with their own sets of pitfalls: The UK’s competition regulator launched a “phase one” review of the Amazon deal last month that could lead to a formal investigation.

The UK Competition and Markets Authority (CMA) said it had “reasonable grounds for suspecting” that the agreement could “result in Amazon and Deliveroo ceasing to be distinct.”

The CMA said Deliveroo and Amazon must remain two separate businesses with their own “sales or brand identity” throughout the review — a process without a clear deadline, but massive repercussions for the entire sector.


Frank Kane’s Davos diary: Swiss efficiency lapses, but so far Davos lives up to the cuckoo-clock image

Updated 22 January 2020

Frank Kane’s Davos diary: Swiss efficiency lapses, but so far Davos lives up to the cuckoo-clock image

Davos comes and Davos goes, but over the last five decades, the one thing you can rely on is Swiss efficiency, right? The trains run on time, the cuckoo clocks chime on the hour, and the snow is swept from the pathways within minutes of the first fake falling. That is the common (even cliched) view of the Alpine nation and its showpiece event, the World Economic Forum (WEF) annual meeting in Davos.

But — and whisper it very gently beneath your breath — maybe the legendary standards of Swiss efficiency are slipping as the WEF celebrates its 50th birthday. Evidence of a lapse from the highest levels of attainment came at Zurich Airport, when the luggage belt seized up inexplicably, and a full 10 minutes elapsedbefore a maintenance man came to attend to it. Tut tut.

Further signs of falling standards were on display at the railway station. The booking desks were besieged, as usual, by WEF delegates keen to complete the final leg of their journey up the Magic Mountain — a two-hour rail journey involving two stops at increasingly higher altitudes.

But only two of the 10 grills were manned, and the line grew longer and more grumpy with each passing minute. The mood was not helped when some trains were canceled and an extra hour was added to the journey. There was much muttering and dark looks shot when the train finally pulled into Klosters.

But thankfully, once you got to the heart of WEF-land, normal service was resumed. There had been a reasonable fall of snow that morning, which gave the place its usual fairytale appearance, but no traffic snarl ups as in previous years, when massive snowfall had caused the place to grind to a halt.

The shuttle buses that are the arterial life-channels of Davos — for those whose budgets do not extend to the black Mercedes limo — were running with their usual Swiss punctuality: Every 10 minutes or so, or even more frequently during peak rush hours.

These, in my experience over the past few years, are becoming frequently extended. Having battled through the registration process and attended one event at the nearby Seehof hotel, I imagined it would be easy to catch a ride on a virtually empty shuttle back to Klosters at around 9.30 p.m. But even at that hour, there was a long queue of unhappy souls waiting to make the same 20-minute trip to the other side of the mountain and their warm, welcoming hotel rooms.

It was the same thing on the opening morning of the annual meeting. I left my hotel — the homely and comfortable Cresta in Klosters — at 7 a.m. in the dark, and at minus 5 degrees Celsius. Again, there was a crowd of people standing huddled at the shuttle stop, shivering and stamping their feet.

The WEF shuttle service was up to the job, however, and I got into the Congress Hall with little trouble. The airport-style screening process — maybe a little more thorough than usual in view of the impending arrival of US President Donald Trump — passed smoothly. One request though: Please WEF, install some hot-air machines in the security hall. The body shock when you remove outer clothing to pass through the metal detectors was wicked.

Then down to business, which for a journalist at Davos means finding somewhere in the congress complex where you can rest a laptop while also providing a good people-watching vantage point. Over the years, I have learned that the Central Lounge — strategically located between the main plenary meeting halls and the (private) members lounge and bilateral rooms — is the perfect spot. Now, who will come my way in Davos 2020?