Deliveroo — the globally popular food delivery service — has launched an ultra-cheap lunchtime service called Flash Deals.
Here’s how it works. Each day, users in London will get the chance to purchase a selected dish from a specified restaurant. This costs £4.99 (about $7), and comes with delivery included. Deliveroo has already signed up some popular London restaurants, including Jamie’s Italian, DF Mexico, and Hummus Bros.
We don't shill.
Check out TNW's Hard Fork.
Meals have to be pre-ordered in advance, so if you don’t place your order by 11AM on the day, you’ll miss out. Users then pick a delivery slot between 12PM to 3PM.
Given that Deliveroo charges between £2.50 and £3.50 for delivery, and usually has a minimum £10 spend (any less than this, and you have to pay a £2 surcharge), this is a pretty compelling offering.
Deliveroo reckons that this will help restaurants better prepare for the lunchtime madness. They can pre-prepare the set meal in advance, and then just have to dole it out into plastic containers as the delivery cyclists arrive. That said, I do wonder how it’s sustainable.
Depending on where they are in the country, Deliveroo pays its couriers about roughly £4 per delivery. That doesn’t leave much room for food costs, let alone a profit margin.
Perhaps it’s assuming that multiple people in an office building will stump for the Flash Deal, in which case, I can see this being pretty lucrative for the company, as it’ll only need one courier to deliver for multiple customers.
Otherwise, I can’t see any other way than Deliveroo incurring a massive loss from each order. A bit like Silicon Valley‘s SliceLine.
Regardless, having raised nearly $860 million from investors, Deliveroo has enough venture capital sloshing around in the bank to experiment with deals like this. It can take a bath, and not really have to worry about it.
Congratulations London, Index Ventures wants to subsidize your lunch.