How does Deliveroo work for Restaurants?

Deliveroo is one of the market giants in the food delivery sector.

The delivery market hasn’t changed massively over the last couple of years and has been more about consolidation with the ‘Big 3‘ taking the lead: Deliveroo, UberEATS and now Just Eat. Amazon Restaurants came and went (and then invested in Deliveroo in Series G). But I digress.

Restaurant Set-Up

When we first joined Deliveroo 5 years ago, there was no set-up fee and they sent you a printer and ordering tablet for you to receive orders.

However, times have changed and Deliveroo wants a large wedge of your cash as a set-up fee to onboard you, input your menu and send you the hardware. I would try to negotiate this, but since their one of the largest in the market, they have a ‘take it or leave it’ approach, which is sad and not helpful for the independent restaurateur.

Deliveroo Order Process

This is something that has also been refined over the years. In the early days, you had control over when the order would be ready and Deliveroo had to be responsive and allocate their fleet around your prep times which was better for the customer, but more logistically challenging for Deliveroo.

In recent months this model has changed to Deliveroo setting the pick-up time for the order when it is placed (the customer can pre-select a time slot also). Most areas are well serviced with drivers, but – when the chips are down – a pick-up time on the order is more advisory as drivers may not be allocated on time meaning you may have to remake some of the food. This is, in part, due to the fact that the drivers are subcontractors – Deliveroo has outsourced the delivery to self-employed drivers. I discussed this logistical challenge in my post Delivery Fail: The Problem with the Gig Economy and how it affects the restaurant directly.

Here’s the ordering process:

  • The order comes through on your ordering tablet
  • The order is Auto-Accepted (you can switch this off, but Deliveroo prefer you not to)
  • The order prints on a receipt with a pick-up time
  • You make the order
  • You wait for a driver who takes the food to the customer
  • If the driver turns up and the food is not ready (and may need more time), they often reject the job and go onto their next gig, leaving you to wait for a new driver and there is no guarantee when that will be.

It’s a very simple, easy-to-follow process but you have no real control over the food-prep time, so for more fine dining establishments, you may need longer to make the food than Deliveroo gives you.

You can toggle a ‘busy’ switch which should give you more time to prepare the food, but in reality, it only adds a few minutes because prep times are based on averages for other restaurants in the area. You can also suspend orders by closing the restaurant on the tablet.

The system does seem to learn because this appears to be less of an issue today (as I write this) than it was when the process was first introduced a few months back. We would get 7 minute prep times for orders which could take 40 minutes to make.

In more densely populated urban areas, there is no issue with drivers (bad weather events aside) as there is always another one just around the corner. In more provincial areas, drivers can sometimes be a challenge – there just don’t seem to be any on the road at all – but Deliveroo is making investments to rectify this as it gives a bad experience for the customer and reflects badly on the restaurant as the customer may think that the restaurant is at fault even though they have no control over the driver allocations.

Paying Commission

Yes, you then have to pay a commission to Deliveroo for every order delivered (which is increased if you work with other delivery companies also). It’s not cheap and has consistently gone up over the years. Deliveroo says it’s worked out like this because they need to manage costs, but they:

  • Charge a hefty onboarding fee,
  • Outsource all the delivery,
  • Charge a delivery fee to the customer on top, and
  • Charge you a commission for the privilege

As of December 2018, the Deliveroo Group filed a loss of £232m with Series G funding in progress. This netted £575m in further investments this year.

To the independent restaurant, the cost structure seems greedy, but in reality, it is how the group operates as it consistently makes a loss. For larger groups and chains who can operate in the same way financially as Deliveroo, it’s just another day at the office.

Reporting

It took longer for Deliveroo to provide an online dashboard than others, but they do send daily sales reports to you with a full breakdown of all your items sold. The online SALES dashboard gives you access to all of this data also.

There is also an INVOICING section which lists each of your period invoices. During COVID these are daily, but prior to that they were twice monthly. You can download a CSV or PDF and it’s really easy. Import these into Excel and you can do more analysis.

Deliveroo do not account for VAT on sales. They leave this to you, so you will either have to rekey your orders into your EPOS to calculate the VAT or post-process the daily sales reports to apply the correct VAT to items sold. Bit of a hassle but easy enough to automate and your accountant can help here also.


I hope this overview was useful? If there is anything you’d like me to look at, review or provide some guides about, let me know in the comments. Thanks!

4 Comments

  1. B Charnley 13 March 2021 at 16:22

    Hi Edward great article. I run a digital design company and we are designing a similar site to Just Eat which we are going to run in our local area only . We aim to offer a vastly lower percentage and allocate drivers to individual restaurants exclusively. Any insights to how we can offer a better service would be useful. Thanks Ben ,Fine Web Design

    Reply
    1. Edward 13 March 2021 at 23:21

      Thanks for the comment, Ben.
      Running a delivery operation is a business proposition in itself. I would say that the focus is on the back-office and operations. Logistics is not as simple as it sounds (as I am sure you are aware) and the success will depend on your drivers (the fleet) plus the support you offer to customers who want to know where their food is, or why it was cold, etc, etc, etc.

      Reply
  2. Noel 22 March 2021 at 11:16

    I was thinking of becoming a driver but to do it properly I decided I’d be working for peanuts. The hassle of being self employed, how to pay tax and NI myself, the prohibitive cost of specialist delivery insurance and not knowing how much you will earn. No real rights abd losing all the benefits not working as though you don’t get much on UC you do get reductions on out goings like council tax. Factor in fuel I just thought to do this legally I’d be working for nothing as what I’d lose in bens would negate any earnings and I could imagine it being stressful at times not finding addresses or place to park. It’s no wonder drivers want to be in a busy area. I bet many do not do it legally as in have correct delivery insurance etc. I think be better working directly for 1 resturant.

    Reply
    1. Edward 22 March 2021 at 23:46

      It’s hard on UC as the opportunity to work as a gig-driver doesn’t come with any guarantees. As you say, you need to do the math to make sure it works for you taking into account the costs to you vs the money you will gain. As a self-employed person, you can offset the costs you have against your taxes so there can be a benefit here – but you need to check with an accountant. Also, once you have one gig, this can open the door to other gigs and some drivers run two or three different posts such as Delveroo, Amazon, etc. I am told companies like Deliveroo, etc, expect everything above-board and expect their drivers to meet all the requirements. And sometimes, just getting out there and doing even a little something helps on the road to greater prosperity and reveals opportunities you may not have even considered. Good luck, Noel and I hope you find something that works for you.

      Reply

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