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.


Saudi finance minister reassures public on taxes

Updated 10 December 2019

Saudi finance minister reassures public on taxes

  • Mohammed Al-Jadaan: There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully
  • The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year

RIYADH: Saudi finance minister Mohammed Al-Jadaan pledged that there would be no more taxes or fees introduced in the Kingdom until the social and economic impact of such a move had been fully reviewed.

He was speaking at the 2020 Budget Meeting Sessions, organized by the Ministry of Finance and held in Riyadh on Tuesday, where a number of ministers and senior officials gathered following the publication of the budget on Monday evening.

“There will be no more fees and taxes until after the financial, economic and social impacts have been considered carefully, especially in terms of economic competitiveness,” said Al-Jadaan.

The government expects to generate about SR203 billion in taxes this year – more than 20.5 percent higher than the previous year and more than 10 percent higher than the expected budget for this year. 

Most of that increase has come from taxes on goods and services which rose substantially as a result of the improvement in economic activity over the year.

The reassurances from the minister come as the Saudi budget deficit is estimated to widen to about SR187 billion, next year, or about 6.4 percent of GDP.