Deliveroo hopes adverts with takeaways will boost profits

DELIVEROO has launched a push into advertising as it seeks to turn a profit and halt a lengthy share slide.

The takeaway app plans to let companies buy space on its order tracking page, hoping it will eke out more revenues from diners.

While restaurants and stores can already pay for priority positions in Deliveroo’s search results and listings, the move will expand the company’s advertising push to consumer brands.

The company described advertising as a “lever the company can pull to increase net revenue” by showing adverts to its 8m users.

Deliveroo’s shares have plummeted since it went public in March last year in what was the UK’S biggest initial public offering of 2021.

Shares have fallen from an offering price of 390p to 88.5p yesterday, as investors have become increasingly pessimistic about delivery apps’ ability to create profits once expected of them.

Deliveroo lost £298.2m last year and has been seeking new ways to boost revenue as it promises operating profits by 2026. Growth has slowed as the end of Covid lockdowns means people returning to restaurants and bars.

Orders grew by just 11pc in the first quarter of 2022, compared to growth of 130pc a year earlier. Higher interest rates and inflation have led investors to sour on tech companies, whose values have been based on profits that may not emerge until years into the future.

A number of delivery apps such as Germany’s Delivery Hero, a Deliveroo investor, have pushed into advertising amid a widespread sell-off in the sector.

Eric French, chief operating officer of Deliveroo, said: “Ad revenue is a small part of Deliveroo’s current model but a big opportunity and a lever the company can pull to increase net revenue.

“Deliveroo has over 8m monthly active consumers, many of whom are ordering with us on a weekly basis, so we have an engaged and valuable audience for brands to connect with.”

The company will allow brands to include samples of their products as part of Deliveroo orders that begin at its network of dark kitchens and dark stores, sites set up only to cook food for the app or deliver grocery orders.