UK-based online food delivery company Deliveroo has slashed its projected revenue growth for the year, citing the difficult economic climate amid the rapidly increasing cost of living.
Deliveroo, which competes with services like Just Eat and Uber Eats, said in a trading update on Monday that total transactions in the first half of the year hit £3.56bn, a 7% rise.
Deliveroo bosses, however, have warned that “increased consumer headwinds” will negatively impact its previously stated revenue projections.
The London-listed firm now expects its full-year transaction growth to be in the range of 4% to 12%, down from the previous guidance of 15% to 25%.
Shares in Deliveroo have dropped by more than three quarters since its public listing back in March 2021. The company is yet to turn a profit since it was founded in 2013 by Will Shu and Greg Orlowski.
For most of its existence, Deliveroo has been focused on growth over profitability. However, as a public company, it has sought to tighten its belt.
“Management is confident in the company’s ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control,” Deliveroo said in a statement.
Customer confidence in the UK for services like online food delivery has dropped due to soaring inflation that is eating into consumer purchasing power.
Deliveroo told UKTN back in May 2022 that it was pausing hiring for a number of roles as it faced challenges from the economic downturn in the tech industry.
The online food delivery industry has had a distant relationship with profitability.
However, revenue for Deliveroo and rivals soared during the pandemic due to stay-at-home restrictions. After the lockdown was lifted, online delivery’s boom retracted but senior management at Deliveroo has remained confident the company can move into profitability.
Back in March, Shu told The Times that Deliveroo was aiming to break even in the second half of next year or early in 2024.
Deliveroo’s newly projected growth slowdown comes as many of its rivals are also experiencing industry challenges.
Deliveroo publishes full results for the first half of the year on 10 August.