Deliveroo and UberEats expanding out of cities and into suburbs could put small restaurants at the centre of a bidding war, according to a food entrepreneur.
Associated with its taxi app until now, Uber poses the first serious threat to Deliveroo’s hold on the restaurant delivery market.
The San Francisco-based firm plans to bring the same upheaval to food as it did to transport, and backed its arrival with an aggressive marketing campaign and free introductory offers.
Although only based in larger cities at the moment, entrepreneur Matthew Agass expects UberEATS to follow Deliveroo into the suburbs.
His frozen yoghurt company, Yogberries, is based in the village of Hale, just south of Manchester in Cheshire, and has been a Deliveroo partner for a number of years.
He said: “We have been working with Deliveroo and have done a lot with them since they came into the suburbs.
“But now UberEATS is coming to the market, not in the suburbs yet , but places like the city centre in Manchester.
“If you expect them to follow where Deliveroo has gone, and eventually branch out, you might expect them to start undercutting.”
Despite becoming one of Europe’s best-funded technology start-ups in just three years, and managing a global fleet of more than 20,000 people, Deliveroo could soon see its hold on the market weaken.
Aggressive growth saw the firm post a loss of £1.4 million in 2014, but it has since built a dominant position in the “last-mile” delivery market – focusing on restaurants and high-end eateries which don’t usually have their own couriers.
Rapid success attracted investors including Yuri Milner, an early backer of Facebook, Airbnb and Alibaba, and the company secured its biggest-ever contract, with PizzaExpress, last year.
But around the time of Uber’s London launch in 2016, David Reynolds, an analyst at Jefferies, told the Financial Times the firm is “discernibly bad news” for the British company.
Agass added: “We started using them in September 2015, and were one of the first in the village. The firm takes 25 per cent of revenue, but I get an iPad and everything else included.
“As a business, they are great and have done very well for us so far.
“Yogberries has been going for over six years, and for two or three of them had a delivery service. When it was me and my partner, one of us went out in the car. Or you’d have to insure an 18-year-old on its insurance.
“That’s at the same time as having a minimum of two or three staff on in the store.
“With all that outgoing, it ended up just not being worth it, so we sacked it off.
“And unfortunately we lost a lot of business from schools and places like that, who ordered in deliveries at lunchtime.”
He claims that since the arrival of UberEATS in 2017, he has seen Deliveroo up its game slightly.
In terms of deliveries, January 2017 was his best month by far – but was soon outstripped by his performance in February.
“I’ve heard Uber are already paying their delivery drivers better than Deliveroo. But Deliveroo has been really good. I get updates on sales every month, and recently there has been information on waiting times.
“They have upped their game, almost as if they see the threat from Uber.
“I am sure Uber know that moving into the suburbs is a viable business option for them. It makes sense when there is so much money behind them.
“They may decide to offer to undercut competitors and take just 15 per cent of revenue, but I’m loyal to Deliveroo.
“Although there may be the chance the competition sees Deliveroo start to bring their prices down.”
Aiming to bring healthy treats to the nation since 2010, Yogberries was one of the UK’s earliest trailblazers of the frozen yoghurt phenomenon, and is currently organising a pop-up store in nearby Frodsham.
After coming up with the concept while travelling in Australia, Agass’ firm is also branching out into frozen theatre snacks.