Deliveroo is bullish on GCC growth prospects despite Covid-19

Online food delivery company Deliveroo saw a major dip in its Gulf business during the initial months of Covid-19 pandemic, but is now bullish on growth for the rest of the year and 2021.

"We experienced a significant decline at the start of Covid-19 … [but] we recovered fast and reached the pre-pandemic growth levels before summer," Anis Harb, the company's general manager for GCC, told The National.

“We are very confident and expect the same growth to continue or even zoom further in the rest of the year.”

London-based Deliveroo entered the GCC market in 2015 with Dubai, followed by launches in Abu Dhabi, Kuwait and Sharjah.

The company expanded its footprint to Al Ain on Wednesday, where it has tied up with different brands including Starbucks, Shake Shack, PF Chang's, Pizza Express, Arabica and Brooklyn Creamery.

“Al Ain has a thriving community with a lot of demand … we look forward to working with our current and new restaurant partners to expand their businesses,” Mr Harb said.

The Covid-19 pandemic has accelerated the “maturity in [the] food delivery industry,” he said.

Though it is enhancing its scope in the UAE, Deliveroo will remain focused on its present areas of operations for the time being and any expansion into new markets will be phased, Mr Harb said.

“We are a hyper-local business and plan to expand hood-by-hood to ensure customer satisfaction and best experience at all levels. So far, we are very happy with the results in the UAE and Kuwait,” he said.

Expansion decisions are made at the central level while considering many factors such as restaurants, customers’ profiles and city lay-out, he added.

“The whole GCC market is very interesting and important to us … we are simultaneously exploring all remaining markets at the moment,” Mr Harb said. He didn't provide a timeline for future expansion.

Deliveroo currently works with 80,000 restaurants and 60,000 riders around the world. It has collaborated with over 4,000 restaurants across the Gulf region.

With schools and colleges shut and more people switching to working from home due to the Covid-19 pandemic, there has been a spurt in online orders in the past few months.

However, Deliveroo has not escaped criticism from some businesses that say their profit margins were squeezed in these trying times as a result of the commissions they need to pay the company.

Mr Harb, however, said Deliveroo is trying its best to support partner restaurants in improving their bottom line.

“We are producing tools to reach new customers, creating virtual identities of physical stores and helping them to go online while significantly cutting their overhead costs,” he said.

For example, Deliveroo is offering three kitchen facilities to restaurants in Dubai, where their staff can come to cook. This could dramatically disrupt their cost structure and ensure that delivery model works best for them, Mr Harb said.

“We are offering them less expensive raw material, supplies, infrastructure, packaging and final delivery,” he said.

The food and beverage business model hasn’t changed for "decades", Mr Harb said.

"Now you are seeing some disruptions. There may be a shift in how restaurants will think about their business but we will be always there to help them in consultative nature at every step.”

Founded in 2013, the company operates in over 500 towns and cities across 12 markets, including Australia, Belgium, France, Hong Kong, Italy, Ireland, Netherlands, Singapore, Spain, the UK and the Gulf region.

While the Covid-19 outbreak has hurt businesses across the globe, Mr Harb sees the crisis as an opportunity to be resilient and fill gaps created by the pandemic.

“We have done a couple of new things on the back of Covid-19. We expanded the facilities of our dark kitchens and started daily conveniences and grocery deliveries,” he added.

Despite a slowing global economy, Mr Harb said his company is in a cautious expansion mode.

“We are hiring more staff and doing what is right for our business and overall industry. Given the size of the market and the trajectory of growth in GCC, we believe that multiple players are positioned to grow in the environment.”