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.
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.