Deliveroo Could Leave Spain To Expand Elsewhere

London-based delivery service Deliveroo is mulling an end to its offering in Spain as part of a plan to expand in new and existing markets, Reuters reported on Friday (July 30), citing a company statement on the high costs of running the business in Spain.

“The company has determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns,” the statement said, per the news outlet. Spain accounted for less 2 percent of Deliveroo’s transaction values in the first half of 2021.

Deliveroo’s consideration of leaving Spain comes a few months after the country’s government said in May that food delivery companies must convert their couriers into staffers by August. A U.K. court said in June that Deliveroo’s workers are self-employed, thwarting the Independent Workers of Great Britain’s efforts to form a union among Deliveroo’s workers.

Deliveroo saw an 88 percent increase in quarterly food orders in the second quarter of 2021. As a result, the delivery company has raised its revenue forecast.

Reuters reported the company now predicts that its gross transaction value (GTV) will grow by 50 to 60 percent in 2021. The earlier forecast called for growth of 30 to 40 percent.

GTV is a measure used by eCommerce companies that have a marketplace with multiple sellers. In the food-delivery industry, this does not include tips.

The company said that it connects customers with over 115,000 restaurants and grocers in the U.K. and 11 other countries. Amazon-backed Deliveroo has a network of 100,000 drivers.

Deliveroo and competitors such as Just Eat Takeaway.com — which make money by taking a cut of every order — have received the benefit of pandemic rules that closed eateries or reduced allowable occupancy. One concern was that sales would drop as vaccinations proceed and rules are eased.

Beyond dining, Deliveroo will provide merchandise from approximately 100 Sainsbury’s stores under a new two-year deal, the two firms noted in a recent joint announcement.