Global food delivery startup Deliveroo has enjoyed 30% week-on-week growth since launching in Australia last November and has now expanded to Brisbane despite ongoing controversy surrounding how much the company pays its “freelance” riders.
The UK-based startup, which launched in Australia on the back of a $140 million Series D funding round, has now partnered with over 600 restaurants in Sydney and Melbourne and will be launching with 50 restaurants and 30 riders in Brisbane.
Deliveroo country manager Levi Aron says the growth in Australia has been better than expected.
“It’s a pretty insane rate. We’re almost creating a new business every 3-4 weeks,” Aron tells StartupSmart.
“The product is quite sticky and the growth in inner Sydney and inner Melbourne over the last two months has accelerated faster than expected.
“It’s a pretty exciting time for Deliveroo in Australia.”
But a Fairfax Media report last month revealed that Deliveroo riders are paid as little as $10 per hour and are employed as independent contractors rather than employees, meaning they don’t receive minimum wage, penalty rates or superannuation benefits.
Deliveroo riders currently receive $16 per hour along with $2.50 for each delivery, but Aron says the company is “trialling” a new system in “busy areas” of paying just by delivery rather than the hourly rate.
He says the riders are paid $20 per hour on average and that people choose to work for the startup for the flexibility it provides, offsetting the lack of benefits.
“They’re flexible freelancers who work a few different roles and ride for Deliveroo a few hours a week at night,” Aron says.
“The majority of riders are usually working as couriers, they’re working as salespeople, and we have journalists that are riding for us at night.
“It’s really the flexibility that these people are looking for.”
The Fairfax report also reveals that although Deliveroo riders are “encouraged” to get insurance, they are not required to do so.
In contrast, Deliveroo’s rival foodora says its contract requires all riders to have personal and third-party insurance, while the company takes out private insurance for them as well.
Get SmartCompany FREE to your inbox every weekday.
Aron again points to flexibility to justify this.
“As freelancers they get to choose where to work and how many hours they work, so there’s different insurance involved,” he says.
“It’s something they take into consideration when deciding to work for us.”
Despite these concerns, Aron says they’re “very proud” of the company’s rider culture.
“The culture is fantastic – these people love riding for Deliveroo and they’re bike enthusiasts,” he says.
Quick growth in a saturated market
The startup’s rapid growth in its first two Australian cities led it to bring forward further expansion plans, Aron says.
“Brisbane was always on our radar,” he says.
“We’ve done a lot of research around food and the population and what people are looking for, and this is the natural next progression.”
This growth has been thanks in part to organic referrals from partnering restaurants, Aron says.
“The restaurants themselves have been an amazing referral for us,” he says.
“They’ve enjoyed the patronage of our customers and they’ve been advocating for us within their own industry.”
Food delivery has become an increasingly saturated and competitive market in Melbourne and Sydney, with numerous international players including Uber and foodora.
Aron says Deliveroo’s focus on the technology platform and user experience sets it apart.
“At the very core we are a tech company, but our focus has been food and will always be food,” he says.
“Anyone can build the technology but it’s the execution and implementation that is key. We have a pure focus on the food and the full end-to-end experience for customers.
“There’s a lot of demand in the space and there’s been huge growth. Consumers are hungry and looking for better delivery.”