Deliveroo’s food parcels hit European roadblocks

An inability to turn a profit has seen food app Deliveroo abandon certain European markets, including Germany, to focus elsehwere. (AFP)
Updated 14 August 2019

Deliveroo’s food parcels hit European roadblocks

  • Restaurant home-delivery app finds life on the continent difficult to swallow

LONDON: Striking French couriers. Spanish court setbacks. The white flag of surrender raised over Germany.

British food delivery company Deliveroo — its boxy lime-blue bags a welcome sight for legions of office workers across London — is hitting sudden bumps along other European roads.

The rough times come as a growing group of startups jostle for the pocketbooks of hungry city dwellers craving special burgers and bento boxes.

Deliveroo has helped revolutionise meals on wheels in much the same way as Uber — which has a rival food catering app — has upended the taxi market.

It is now encountering identical questions over whether its employment schemes meet labor laws across around 200 cities where it has set up shop.

Its tens of thousands of delivery workers — most of them young men on bikes and scooters — are officially self-employed and deprived of a minimum wage or paid leave.

They must also provide their own means of transportation and smartphones that keep them connected to both clients and dispatchers.

This arrangement prompted Deliveroo’s French bikers to call for clients to boycott the brand last week.

Discontent in Deliveroo’s second-biggest market after the UK boiled over only days after a Madrid court ruled that it had wrongly signed up more than 500 riders as self-employed contractors.

Deliveroo has appealed the ruling but faces several more similar cases in Spain later this year.

These cost-cutting contracts are being tested at a turbulent time for a new service that is booming in popularity but unable to turn a profit.

Deliveroo announced Monday that it was pulling out of Germany after four years and refocusing on other parts of Europe and further afield in Asia.

The decision was especially painful because it clears the path for a local rival called Lieferando to dominate Germany on its own.

Lieferando is owned by the Dutch company Takeaway — itself in the process of merging with the UK-based upstart Just Eat.

“Consolidation has come to the hyper-crowded food delivery space,” Euromonitor International research group analyst Maxine Vogt said.

“There are at least two dozen companies in the restaurant ordering and delivery business. And that doesn’t even include grocery delivery!”

Scale and size are essential for these rivals to forgo immediate profits as they pile money into expansion that could eventually force the laggards to drop out.

Deliveroo remains an investor darling that has made it into one of the world’s few “unicorns” — privately-owned tech companies valued at more than a billion dollars by the market.

It has even piqued the interest of Amazon.

The Seattle-based online shopping behemoth was the biggest investor in a round of fundraising in May that brought in $575 million.

The various investments and mergers show that “scale is the only way to survive,” Vogt said.

But they also come with their own sets of pitfalls: The UK’s competition regulator launched a “phase one” review of the Amazon deal last month that could lead to a formal investigation.

The UK Competition and Markets Authority (CMA) said it had “reasonable grounds for suspecting” that the agreement could “result in Amazon and Deliveroo ceasing to be distinct.”

The CMA said Deliveroo and Amazon must remain two separate businesses with their own “sales or brand identity” throughout the review — a process without a clear deadline, but massive repercussions for the entire sector.


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.