Increased smartphone penetration and smartphone computing power has enhanced how we communicate, changing the way many businesses operate and leading to a new classification of business model named the on demand economy. Here, digital technology enables the real time matching of demand and supply, coordinating an unallocated pool of physical resources to deliver a product or service. This model is particularly disruptive in sectors where mobility is a key part of the task such as transportation (Uber) and food delivery (Deliveroo).
Deliveroo – “Proper Food, Proper Delivery”
Headquarted in London, Deliveroo is a fast-growing tech company that markets, sells and efficiently delivers meals from high quality restaurants to homes and offices. The idea came from William Shu who, after moving from New York to London, was so surprised at how difficult it was to get quality food delivered that he subsequently launched the company with his co-founder Greg Orlowski in 2013. Today, Deliveroo hires about 800 people and works with over 16,000 restaurants and over 20,000 delivery riders in over 80 cities across 12 countries in Europe, Asia, Australia and the Middle East . Their rapid growth has led to revenues of over $150M , a valuation of over $1BN and total funding of $475M from venture capital firms such as Index Ventures, Hummingbird Ventures, Accel Partners and others .
Technology-Enabled Delivery Process
Customers order online or through a smartphone app from a selection of local high quality restaurants. After the order is submitted to the restaurant, the waiting staff check the order before sending it to the kitchen. The order is tracked through the kitchen and around 5-7 minutes before the order is ready, a nearby Deliveroo rider is notified through a smartphone app. The order is then marked and the driver comes and collects it before delivering to the customer. Meanwhile the customer has full visibility of where their order is in this process and can track the rider’s whereabouts from restaurant to door .
Such a food delivery network isn’t a novel idea but until recently the costs of setting up the necessary proprietary hardware and software, and maintaining a paid fleet of drivers were prohibitive. Now, most people have a GPS-enabled smartphone powerful enough to run basic applications and Deliveroo can provide restaurants with cheap Android tablets to connect to their point of sale systems. In addition, the digitalisation of background checks and payroll processing systems enables rapid onboarding of new drivers into the delivery network. By integrating these with sleek web and mobile apps and a proprietary logistics optimization algorithm Deliveroo can deliver on their unique value proposition of reliable and efficient high quality food delivery, achieving an average of 32 minutes per delivery .
“They are creating a new market, addressing a latent customer need, while allowing restaurants to increase throughput.”
– Martin Mignot, Index Ventures 
For restaurants, Deliveroo handles the burden of delivery logistics (overheads, delivery fleet investment, payment processing etc.) as well as online and offline marketing. This enables incremental sales through existing and additional customers. The delivery platform also drives demand at times of the week when restaurants are less busy. Overall, restaurants see revenue increases of around 30%, fuelling increased returns and enabling higher employment opportunities .
Challenges – Employed vs. Self-Employed Riders?
Whilst technology has clearly enabled Deliveroo to create value for customers, restaurants and shareholders, questions have been raised about the value to the delivery drivers, particularly with regards to their employment status. The on demand economy has led to a rise in self-employed workers who benefit from flexible work hours but are not entitled to the rights available to employees, including sick pay, paid holiday, and minimum wage.
Whilst the majority of riders appreciate the ability to work flexibly, some argue that they are unable to negotiate the terms of the service and thus they are effectively employed by Deliveroo (drivers are paid a flat rate of £7.00 per hour plus a fee of £1 per delivery). In fact, a recent employment tribunal case (currently under appeal) found that a group of drivers for popular taxi hailing service Uber should be classified as employees . Classifying the employment of on demand workers in this way may put the business model at risk given the increased cost.
This may be an instance where legislation needs to be updated to keep up with changes in technology and the new ways business and consumers interact. I believe Deliveroo and other on demand services should work with academic institutions and think tanks to resist changes in employment status and maybe even press for changes in employment law to create a third category of employment that considers the new flexible ways people can work today whilst protecting their key rights.
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 General Catalyst, “Deliveroo Overview,” [Online]. Available: http://generalcatalyst.com/companies/deliveroo/. [Accessed 16 November 2016].
 J. Titcomb, “Deliveroo revenue to hit £130m this year,” Guardian, UK, 5 June 2016. [Online]. Available: http://www.telegraph.co.uk/technology/2016/06/05/deliveroo-revenue-to-hit-130m-this-year/. [Accessed 16 November 2016].
 I. Lunden, “Food startup Deliveroo raises $275M as Uber eats into its European market,” TechCrunch, 5 August 2016. [Online]. Available: https://techcrunch.com/2016/08/05/food-startup-deliveroo-raises-275m-as-uber-eats-into-its-european-market/. [Accessed 16 November 2016].
 Deliveroo, “Introduction to Deliveroo,” June 2016. [Online]. Available: http://ec.europa.eu/information_society/newsroom/image/document/2016-6/deliveroo_13855.pdf. [Accessed 15 November 2016].
 M. Mignot, “Building a local food delivery network,” Index Ventures, 26 June 2014. [Online]. Available: https://www.indexventures.com/news-room/blog/building-a-local-food-delivery-network. [Accessed 16 November 2016].
 H. Osborne, “Uber loses right to classify UK drivers as self-employed,” Guardian, UK, 28 October 2016. [Online]. Available: https://www.theguardian.com/technology/2016/oct/28/uber-uk-tribunal-self-employed-status. [Accessed 15 November 2016].