Deliveroo boss defends disastrous float as shares keep falling

Matthew Field 15 April 2021 6:21pm BST Deliveroo has warned that it could suffer a slowdown in growth when lockdown restrictions lift, as bosses struggle to steady the ship after a

disastrous float in London. The takeaway app handled 71m orders in the first three months of 2021, more than double the volume of a year earlier - but it said that this breakneck expansion

is unlikely to continue now the public are able to venture back to pubs and restaurants. Deliveroo shares fell 3.1pc to 261p, valuing the company at £4.8bn. The stock is now down about a

third from its 390p float price. Will Shu, the chief executive, said he would not “finger point” over the listing flop, despite claims Deliveroo’s banks overvalued the business. The

app's customers bought £50m in shares in Deliveroo as part of the offering and are now sitting on significant paper losses. Mr Shu said: “My message to retail shareholders and the wider

investor community is: it is on me to prove the long-term value of this company.” He also confirmed that Deliveroo is lobbying for a major change to employment law so that it can provide

pension contributions and holiday pay to freelance riders without having to sign them up as employees. The business and other firms in the so-called gig economy pay self-employed workers per

job rather than per hour. Mr Shu claims he is seeking to preserve the flexibility this approach gives to staff, while improving their conditions. "We’ve been talking to various people

since 2017 [on] how we offer more security in the context of work that is flexible. That is where I want this to get to… ideally with a legislative change," he said. Mr Shu also pushed

back on claims from rival Just Eat that the Anglo-Dutch takeaway company was poised to seize some of Deliveroo's UK market share. “When we were a private company it was difficult to

make comparisons across players, but now we can take a look at those directly. We believe we have further extended our significant leadership position [in London].” The company shared a

chart from analysts at JP Morgan which showed Deliveroo’s orders in the UK had increased 121pc in the first three months of the year, versus Just Eat whose orders were up 96pc. Mr Shu

declined to comment on public attacks by Just Eat against Deliveroo’s business model including tweets from its chief executive Jitse Groen, who called its rival's float a disaster: “I

can’t comment on other people, it is not my style." Deliveroo did, however, admit it was difficult to say how much of its growth since the start of the year was driven by lockdown

restrictions. Revenue at the business jumped to £1.7bn in the quarter, 130pc higher than a year earlier. The company said: “Deliveroo expects the rate of growth to decelerate as lockdowns

ease, but the extent of the deceleration remains uncertain." Mr Shu  insisted demand remains strong. The number of consumers using its app frequently rose to 7.1m a month, up from 3.7m

this time last year. The number of times users placed orders a month also rose slightly. Mr Shu said: “This is our fourth consecutive quarter of accelerating growth, but we are mindful of

the uncertain impact of the lifting of Covid-19 restrictions. “So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders

throughout 2021, we are taking a prudent approach to our full-year guidance.” Deliveroo said it is now working with 117,000 restaurants. It expects growth this year of between 30pc and 40pc.