Deliveroo gears up for more culinary concepts

Caveat: Delivering big plans, rich footballers and Lidl expansions

 

You may have noticed that Deliveroo’s turquoise army of cyclists has been growing rapidly in Irish cities in recent months. It looks on course to grow further.

The company, which uses a web platform to provide home-delivery services for restaurants, is gearing up for further expansion here and is seeking sites in Dublin for its Deliveroo Editions satellite kitchens concept.

Deliveroo is also looking to expand its services further to Irish drinks outlets in coming months. Home delivery of booze? Suburban publicans will have heart attacks.

Deliveroo celebrated its second anniversary in the Irish market this week with a dinner at a Georgian house in the south of the city, hosted by the new head of its Irish operation, former Google executive Liam Keenan.

The food was, of course, delivered to the plush premises on bikes.

Gig economy

Deliveroo is at the heart of the so-called “gig economy” of freelancers that is changing the way many parts of the service industry works. Unlike JustEat, which is aimed at existing takeaways, Deliveroo actually delivers the food on behalf of its restaurants, most of whom would not ordinarily be in the home delivery space.

The concept is a bit like Uber’s taxi platform. Deliveroo doesn’t directly employ its riders, but rather signs them up as self-employed contractors. They pick up work through its technology platform, which uses algorithms to match demand from restaurants and diners with riders in local areas.

It’s a clever model, although the London-headquartered company has faced scrutiny in the UK, and also from the Labour party in Ireland, over the employment arrangements of its riders. Some see the “gig economy” as simply a way for some tech companies to get around having to provide traditional work contracts. Virtual rights, in a sense.

Deliveroo started in Dublin two years ago with 12 riders and a similar number of restaurants. Keenan says it now has well over 400 Irish riders in five cities, expanding to also include Cork, Limerick, Galway and Belfast. Its roster of restaurants has also ballooned past the 400-mark, including many well-known Dublin eateries such as Dillingers, Carluccios and the Unicorn.

In its first 11 months in Ireland, it clocked up revenues of only about €400,000 and made a loss of more than €1 million. But that is to be expected in start-up mode. Accounts have yet to be filed for 2016.

It is barely two and a half years since Deliveroo’s founder, former investment banker Will Shu, expanded the service outside London, where it was founded. It is now in over 100 cities globally and has raised in excess of $375 million (€345 million) from investors, including some heavy duty backing from Irish tech entrepreneur, Dylan Collins.

Monaghan man Keenan, who came home to head up the Irish operation in January after running Deliveroo’s Midlands region in England, says he is here to “scale it up”.

Editions launch

One route he is pursuing is the launch in Dublin of Deliveroo Editions. Originally trialled as Roobox, this format involves opening satellite kitchens to serve areas where there are plenty of residents, but few restaurants.

Deliveroo will deliver food only within a couple of kilometre radius of each restaurant – the turquoise army can pedal only so fast. With Editions, it plans to open its own delivery-only kitchens in under-served areas that would each be open to use by several independent restaurateurs at a time.

It also plans to expand its service beyond the five cities it currently serves in Ireland by the end of the year, the company says.

Keenan confirmed it will go further into the drinks delivery market “in the next three months”. This is sure to get the backs up of the vintners federations, if it is seen to encourage more people to stay at home on a Friday night instead of popping down to their local.

Biggest challenge

Perhaps the biggest challenge facing Deliveroo, however, is the growing unease in political quarters around how the gig economy works for the people who rely upon it for their living. Labour has zeroed in on the sector as it seeks to resurrect its status with young workers

According to Deliveroo’s Irish website, it pays its riders €8 per hour plus €1 per delivery in Cork, Galway and Limerick. In Dublin, however, where it has greater critical mass, it has shifted its riders onto a piece-work only basis. This suggests that as soon as it builds up enough business in one location, the abolition of flat rates is its preferred model.

This is fine if there is enough demand for everyone to make money. But what happens when there isn’t? Deliveroo would be well advised to take heed of the public relation disaster that has befallen Uber over the reportedly low earnings of some of its drivers.

The gig economy will survive in the long term only if it deliveroos sufficient benefits for everybody.

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Football finances

Legal tax avoidance via Ireland features prominently in the latest instalments from Football Leaks, the confidential leaks website that has the money men of the global football industry in its sights. Real Madrid’s Cristiano Ronaldo and Manchester United’s Paul Pogba are both mentioned in an Irish context.

Two Der Spiegel journalists, Rafael Buschmann and Michael Wulzinger, have written a book in conjunction with Football Leaks about the eye-watering sums of money flowing through the sport at the elite level.

Extracts published this week in Britain say Ronaldo charged a Saudi telecoms company £920,000 (€1.1 million) for 4½ hours of his time for a photoshoot in 2013. The money was paid to MultiSports & Image Management (MIM), which is based in the Dublin offices of accountancy firm Moore Stephens.

MIM is linked to football super agent, Jorge Mendes, who has also previously used the Irish company for payments related to the image rights of other clients including Jose Mourinho, the Manchester United manager.

Meanwhile, Pogba’s super rich super agent, Mino Raiola, apparently has links to Clonakilty in Cork. Football Leaks says he transferred Pogba’s image rights to a Clonakilty company, Blue Brands, towards the end of Pogba’s last season at Juventus. The rights were then flipped on to a company in the tax haven of Jersey.

A quick flick through the company documents for Blue Brands reveals that one of the directors is listed as Vincenzo Raiola who, the extract says, is the son of Mino, who reportedly earned over £41 million from Pogba’s United transfer alone.

According to the documents, however, Mino is only eight years older, which is a bit young to be a dad. More likely it is his cousin or brother.

What a beautiful game it is to manage the affairs of the richest footballers on the planet.

Lidl plans to flatten Shankill centre

Lidl paid at least €8.3 million last year to buy Shankill Shopping Centre from its Baltic owners, who had extensively remodelled the building in the early years of the recovery before flipping it.

The German discounter, however, has apparently told local residents that it plans to flatten the newly revamped shopping centre to build one of its new format stores over a car park. There will also be a medical centre, pharmacy and creche on the site.

Lidl paid its cash simply for the site. Lithuanian retail magnate Nerijus Numavicius, who bought it for more than €6 million in 2012 before shelling out for the a revamp, must be wondering why he bothered.

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