News & Analysis

Food delivery startup Deliveroo announces Brisbane expansion

- April 11, 2016 3 MIN READ

Six months on from its launch into Sydney and Melbourne, food delivery startup Deliveroo has announced its expansion into Brisbane. With 50 local restaurants on board, the service will be available in the Brisbane CBD, Fortitude Valley, New Farm, Teneriffe, and Spring Hill.

Levi Aron, country manager for Deliveroo, said the expansion has come ahead of schedule due to “the growth and stability” the service has experienced in Melbourne and Sydney.

“Since launching in Australia, our growth on average is 30 percent week on week, at times even higher,” he said.

The service, which raised a $100 million Series D funding round late last year, has 600 restaurants active across Sydney and Melbourne, with the average delivery time from the placement of an order through to delivery down to 32 minutes.

Aron credits the technology behind the service for this growth. Deliveroo works through three apps: a consumer app, a restaurant app, and a rider app. The three work together to time the ordering, prep time, and ride; riders are assigned deliveries based on their proximity to a restaurant and, based on the distance between the restaurant and delivery address, whether they are riding a bike or scooter.

“Our drivers get there before the food is ready and take it straight to the customer. There are no stop offs or multiple deliveries going on. That’s the whole customer experience, so we don’t look at ourselves as some other companies do as the last mile, we look at ourselves as the whole experience. That’s why it’s become so sticky,” Aron said.

Customers are able to rate each element of their experience, from the quality of the food through to the performance of their delivery rider. Aron said Deliveroo has account managers working with restaurants to provide feedback on any negative experiences, should they occur, to rectify the situation; with Deliveroo’s brand focused on the premium, there is scope to take restaurants off the platform.

“We have our own brand, but we are also a restaurant’s front of house, and also the front of house for all the other brands or restaurants, and it’s very important we maintain that,” Aron said.

The expansion comes a few weeks after Deliveroo came under fire for the payment of its delivery riders, who are classed as independent contractors and must sort out their own insurance, tax, and superannuation – not an uncommon occurrence among startups. The Sydney Morning Herald alleged riders for Deliveroo and competitor service Foodora are paid as little as $10 an hour, with a fee paid for each delivery made, while TripleJ program Hack found some drivers in new trial delivery areas do not receive an hourly fee but rather $10 per delivery; Fair Work told Hack it is looking into Deliveroo.

However, Aron insisted the service loves its riders, who have a “fantastic culture, they enjoy what they do.” Deliveroo ensures this, he said, by onboarding drivers who first and foremost love to be out on their bike.

Around 70 percent of Deliveroo’s riders have day jobs and ride in the evening, with riders ranging from professionals to students to backpackers to those working other hospitality jobs. The churn rate varies, Aron said, but riders stay on for an average of two months.

“The biggest way we get people to ride for Deliveroo is from internal referrals, which is riders recommending their friends. At the end of the day, if your friend recommends you do something, and they enjoy it, then you probably will too,” Aron said.

Looking ahead, Aron said Deliveroo is focused on growing in Brisbane, taking its learnings from Sydney and Melbourne to make its rollout smarter up north, while continuing to expand across its existing markets, evolving its technology to handle that growth.

“Someone once said to me, ‘don’t fear your failure, fear your success’. It’s one thing to wake up tomorrow and have 50,000 orders, but how are you going to do it? If you don’t do it, you just upset 50,000 people. I think the biggest challenge is continuously managing that growth in a sustainable way, yet in a very passionate and exciting way.”

Image: Levi Aron. Source: Supplied.