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More big investors shun Deliveroo over workers' rights

104 points by AndrewDucker 6y ago

EdwardDiego 6y ago
Holy crap, is this ethical investing? Or are they foreseeing legal issues that make it a bad investment... > the way the company employs its riders is not socially acceptable, and poses a risk to its future. Ah, it's the latter.
- agent008t 6y ago
  Ideally, you want the former and the latter to be equivalent.
  - VBprogrammer 6y ago
    An interesting take on this is that essentially we are seeing the results of strong unionisation in the taxi industry leading to cross polenation of protections in related industries (or at least investor fear that it may happen).
  - londons_explore 6y ago
    The former and the latter can be made equivalent if unethical things can be made retrospectively illegal. It's bad for business to do so, but it's happening more and more frequently that things like not giving your workers sufficient breaks/pension contributions/healthcare/etc can after-the-fact be corrected leaving a big liability for that kind of behaviour. Obviously any country that gets a reputation for changing laws after-the-fact will soon lose all outside investment... So it isn't a clear win.
  - notahacker 6y ago
    In this case, to an extent, they are. Deliveroo won one court case arguing its delivery drivers were contractors rather than employees being paid less than minimum wage, but after Uber lost in a higher court, the future of its business model depends on whether the ability to reject orders is perceived as sufficient freedom to negotiate independent contractor rates.
- Milner08 6y ago
  Yes, I'd say considering Uber in the UK has been force to start paying minimum wage and giving paid holidays to its drivers I imagine they think the same is very likely for Deliveroo.
  - varispeed 6y ago
    If drivers get hired on inside IR35 contracts, they won't have to be paid minimum wage whilst being treated just like regular employees. They legally won't have any employment rights. The changes in law come to force in April.
- Mauricebranagh 6y ago
  I suspect the potential legal issues might be the real reason.
- Closi 6y ago
  Call me sceptical, but these same companies that say one asset is 'unethical' will invest in another that relies on slave labour in another market as soon as they see a buck to be made. They probably forecast legal issues that make it a bad investment, and then will say it's not socially acceptable for the PR. I mean, I doubt that Deliveroo labour standards are actually worse, for example, than a cambodian clothing manufacturer which was scored as one of the worst in the world for a lack of "forced labour safeguards". Aberdeen Standard (one of the companies criticising deliverro) proudly states on their website that their investments in this manufacturer gave great returns for their innvestors, while poo-pooing Deliveroo for labour standards. Hmm, I detect a possible contradiction...
  - KptMarchewa 6y ago
    > Call me sceptical, but these same companies that say one asset is 'unethical' will invest in another that relies on slave labour in another market as soon as they see a buck to be made. In their eyes, slave labor is unethical in western countries and business as usual in rest of the world.
    - TeMPOraL 6y ago
      I think it's the same for them in both cases, just in western countries there are laws they could run afoul of, and possible PR damage to manage.
- vesinisa 6y ago
  I am not buying it. Food delivery is a simple menial job akin to cleaning. It will always be done by the lowest bidder. Regulation may affect the minimum driver compensation positively in the short term, but not too much before these delivery companies themselves become infeasible. However, the food delivery companies have already managed to bootstrap such massive market demand for the service they offer that it's not anymore realistic the industry would be regulated to death at this point. In the long term, the driver compensation will also go up - either as a result of either regulation or – more likely – driver collective action. Meanwhile, these investment funds are missing out on the birth of new basic service industry, and by extension guilty of mismanaging their customers' funds.
colesantiago 6y ago
This time the big investors (mainly Amazon) and the founder of Deliveroo have actually admitted their intention to sell before they list this stock. Oh and that 'generous' £50m stock allocation they are offering the public [0] before the majority investors all sell, combined with a heavily loss making company AND the historic employee classification that the supreme court ruled against Uber [1] recently in the UK? Cocktail for a blindingly obvious scam in broad daylight, and they know it. Just look at how $DASH turned out. This is an easy no buy even when the scam has been admitted to the public and retail investors. Take heed this advice. [0] https://www.altfi.com/article/7672_deliveroo-ipo-kicks-off-with-50m-primary-bid-deal https://www.altfi.com/article/7672_deliveroo-ipo-kicks-off-w... [1] https://www.bbc.co.uk/news/business-56123668 https://www.bbc.co.uk/news/business-56123668
- varispeed 6y ago
  > the historic employee classification that the supreme court ruled against Uber When IR35 changes come to life in April, this will not be relevant, as Uber and others can just issue in-scope contracts to workers and bypass employment laws altogether, legally.
  - Nextgrid 6y ago
    In-scope contracts still mean there's a higher tax impact which means the delivery platforms will need to compensate.
    - varispeed 6y ago
      Unlikely, because where do those workers go? It is the same in the IT market - contracts changed to in-scope without significant bump.
  - pjc50 6y ago
    Could somebody explain this? It looks to me that IR35 is changing against "disguised employment" specifically to get more income tax by declaring more people to be employees.
abhinav22 6y ago
One of the most unethical companies that I know. Pushes restaurants to the brink of bankruptcy and pays their riders close to nothing. Abusive human rights in third world countries (much worse than how they treat riders in UK and other markets) Tried to manipulate pricing & food choices with various algorithms (hiding restaurants, making them pay for screen estate) Trying to run ghost kitchens and further capture market share / margin with poor quality ingredients and misleading advertising (nice photos make it look like a restaurant but it’s some sweat shop instead, likely with unhygienic conditions and slave labor) With the pandemic receeding, I LOVE walking in fresh air and eating fresh food at a restaurant On a general note, the world is so beautiful and needs to be enjoyed in person. All these apps are a cheap and manipulative substitution that really reduce quality of life for many. I’m looking at you Facebook, Instagram, LinkedIn, Deliveroo etc
- FartyMcFarter 6y ago
  > Trying to run ghost kitchens Is a ghost kitchen that different from the kitchen in a regular restaurant? Either one doesn't strike me as the best working environment, not necessarily anyway.
  - Tsiklon 6y ago
    A ghost kitchen is a kitchen associated with a restaurant that doesn’t serve walk-in customers or have the capacity to allow customers to sit-in. Often times these kitchens are anonymous looking from the outside, often located outside of the town centre In the UK they should be beholden to the same hygiene standards as any other food preparation business Some of these kitchens have their own branding and are not associated with a restaurant, but if you know your local area and see some restaurants which you don’t recognise on deliveroo or the other food delivery services, it’s possible that they are a ghost kitchen.
  - tweetle_beetle 6y ago
    The Guardian ran a few alarmist articles on them going back a while which might have sparked some of the outrage, including this opinion piece [1]. It turns out these "dark satanic mills" are often: hot, without windows and cold in winter. I don't advocate for bad working conditions, but it must be hard for anyone who has ever worked in a kitchen to keep a straight face when reading that. Even many Michelin starred kitchens are horrible environments. [1] https://www.theguardian.com/commentisfree/2018/oct/09/dark-kitchens-satanic-mills-deliveroo https://www.theguardian.com/commentisfree/2018/oct/09/dark-k... Edit: This isn't meant to be whataboutism, just pointing out that a "ghost kitchen" is only really different from a normal kitchen in its business structure. By and large, catering is not, and has never been, a glamorous industry. If you want to stop kitchens being difficult places to work, that's a worthwhile cause, but much, much bigger than Deliveroo.
LatteLazy 6y ago
2 Big investors, out of how many thousand?
- adrianb 6y ago
  Indeed, I wouldn't look too much into this. The article is more a part of the media's anti-tech campaign and less an indication of the overall investor sentiment. We'll see in the IPO how it actually performs.
  - AlexandrB 6y ago
    What kind of "tech" is Deliveroo exactly? Did they invent some kind of new graph theory or search algorithm that enabled their business? The only "tech" seems to be in working around employment law. This is like calling a sweatshop "tech" because they "innovated" a way for employees to be paid below minimum wage.
    - colesantiago 6y ago
      Just an app and website, just like Just Eat, Uber Eats and Foodhub. Can place an order by just calling them, most restaurants display their phone numbers online. Shockingly, yellow pages still exist in the UK even online.
    - deleted 6y ago
      [deleted]
midasuni 6y ago
I don’t get these platforms. If I want a delivery I phone my local reaturant I want to cook for me and ask them to deliver. (Maybe they have a website instead) The relationship is between me and the restaurant, whether it’s the local curryhouse (Indian Ocean) or dominos. They may not deliver at all, or they may have a deal with a local taxi firm, or employ their own drivers, that’s upto them. I dont care where they buy knives from, or foil boxes, or prawn crackers, or delivery service. If I dont like the food or the delivery time or another aspect of the service I go elsewhere. Why would I want to replace that with a middleman who can squeeze both sides and offers very little. I know my favourite restaurants, I have a relationship with them. The bulk of the value is mainly at the restaurant, not the delivery or the ordering process. Compare with uber which is identical to any other minicab firm in the U.K., but due to a good app also improves on the value of a hailable taxi, and that’s the difference. I want to do business with the company providing value, not one connecting me via a proxy. It would be like ordering a takeaway in the 80s through the GPO operator, who would take my order and pass it on. Why would I want that?
- vesinisa 6y ago
  You are an exception then. Most people are compelled by an app that lets them see what restaurants deliver near them, and makes the ordering process really easy - no need for awkward phone calls or the hassle of uncertainty about when will your food actually arrive. The consumer segment who see value in this service is enough large that restaurants will sign up for Deliveroo/whatever to not miss out on the segment, even if that comes with a small premium to the platform. Still, if you want to support your local restaurant you should always order directly with them to cut out the middle man.
  - petercooper 6y ago
    Agreed. People's reluctance to actually talk on the phone or to manage uncertainty is often overlooked in the popularity of apps like Uber, Deliveroo, Just Eat, et al. People will, to an extent, trade extra money to not have the ambiguity of human communications placed in the middle of a transaction.
obayesshelton 6y ago
This is interesting and slightly off-topic but relevant. I see Deliveroo, Uber Eats etc in a very similar situation to Amazon Prime. In the UK nobody really offered same day delivery for goods other than Amazon. Not many restaurants had websites or a unified payment processor (this is key for me). Now a lot of stores and especially Argos do same day deliver and have great product and quality control. I see Prime loosing out. I now see that all the stores I buy food from off Deliveroo giving me a voucher code for 20% off id I go direct. I feel that Deliveroo and Prime had an edge whilst the supplier caught up.
- carmen_sandiego 6y ago
  I disagree. I don't want to go to multiple sources for the same reasons I don't want 20 different on-demand video streaming subscriptions. The difference is, content exclusives are normalized now, so Amazon Prime Video, Disney, or whoever can try to entice me away with the content I like. Argos is not going to get exclusive rights to supply a certain product, so everything will always be on Amazon and I'm unlikely to leave. Did you even have problems with prime? I'm highly skeptical that Argos offers a better service. I'm inclined to think of Argos as generally stodgy, just from a superficial point of view. Maybe they've changed, but it means I'm unlikely to give them a shot. I'm just reminded of their terrible in-store experience: painfully leafing through the catalogue, typing the SKU into their spongy/sticky keypad, waiting around to pay, waiting around again to collect. On the other hand, I have good experiences with Amazon. I know what will happen if something goes wrong--they will do right by me, generally. Same with Deliveroo. I know how it works for every order, regardless of where I order from. Switching that to a separate consideration for every restaurant is mental overhead I don't want to deal with.
  - obayesshelton 6y ago
    Hey, great response and interesting talking points there. I agree with the "20 different streaming services" I think somebody (ROKU have started) need to address this pain point. I do agree with all of your other points as well. Just based on your reply I could guess your age haha I also remember the endless flicking of pages in store. I kinda liked the hunt!
varispeed 6y ago
From April situation of workers will be legitimised as government voted in no rights employment in the form of IR35 changes. This means Deliveroo or other company can issue an in-scope contracts for workers and basically treat them the same as if they were employees, but they won't have any employment rights - no holiday pay, no notice, no right to unionise and so on. Even if a driver gets pregnant, they can be terminated on the spot without consequences. On top of that, the "employees" will have to pay the same tax as if they were actually employed and won't be able realistically to claim any business costs.
- vonwoodson 6y ago
  Glad to see that America still excels at exporting our culture. Here they call this practice “Right to Work”.
- varispeed 6y ago
  There is a step-by-step guide how employers can transform their existing staff into no rights employees using the new rules: https://norightsemployee.uk/step-by-step https://norightsemployee.uk/step-by-step
gillesjacobs 6y ago
In 2017-2018, friends of mine became delivery cyclists in-between jobs for UberEats and Deliveroo, I also have a friend who went to a local delivery business. Deliveroo paid best slightly above hourly minimum wage, UberEats pulled the rug from under their drivers when changing from hourly pay to per-delivery pay. The local small business was the worst paying, paid less than minimum hourly wage. Deliveroo and UberEats back then were fine back then as a temporary in-between job or to earn on the side when they were burning through venture capital and fearing strict local European worker rights law. In Brussels, they definitely paid better then many local delivery companies. Now that they are well-established and some European countries have legal frameworks for "the sharing/gig economy", they are squeezing both sides. The delivery workers are pushed by lowering rates, lowering delivery time, unfair algorithmic task asssignments, etc. Restaurants are being squeezed by increased rates. Personally, I try to order straight from the restaurant and I seek out restaurants that employ their own drivers. There are still plenty of those around here, but that number is decreasing.
- NicoJuicy 6y ago
  I just order directly and go for a walk to get the food ( or by bicycle). Not the worst thing to do to spend some time outdoor these days.
xmdx 6y ago
From an investors point of view the last thing you want is an Uber situation, where you have to classify all drivers as employees and take on a new massive cost. It's one of their biggest risks at the moment. From a human point of view I hope that does happen. They even admit it's a huge problem with their profitability plan: https://london.eater.com/2021/3/24/22347981/deliveroo-delivery-uk-riders-ipo-valuation https://london.eater.com/2021/3/24/22347981/deliveroo-delive...
- vonwoodson 6y ago
  Worse than that: Uber has yet to turn a profit!! [1] [2] Even treating its “independent contractors” like d09(c)h!7 isn’t enough to make the business profitable. As best I can tell, investors are literally investing in the idea... no, hope, that companies can somehow exist without real employees. That they can Pray Away the Proletariat. [1] : https://morningology.com/four-top-reasons-why-uber-isnt-profitable/111465/ https://morningology.com/four-top-reasons-why-uber-isnt-prof... [2] : https://www.forbes.com/sites/bethkindig/2020/03/25/can-uber-become-profitable-this-year-deep-dive-analysis/?sh=3c50d18f396d https://www.forbes.com/sites/bethkindig/2020/03/25/can-uber-...
  - xmdx 6y ago
    I don't think immediate profitability is a concern for Uber, investors are all in on future profits when/if they move to autonomous cars. The profitability is far greater then, rather than now. I don't know how deliveroo future profits look in comparison.
    - KptMarchewa 6y ago
      They sold autonomous car division few months ago. If they won't own the technology, then Uber has no moat when it comes to service - people generally use cheapest ride hailing app.
phkahler 6y ago
>> The delivery company hopes to be valued at up to £8.8bn when it lists its shares in April. Does anyone realize that high valuations are not in the long term interest of a company? That only benefits current investors. Never the employees, suppliers, or customers.
zahma 6y ago
In my EU city, it is quite clear that these exploited workers are the major delivery service of food to the masses. The curfew means that even while I want to, I am not allowed to pick up pizza from the spot down the block from me because the restaurant is rightfully afraid of the city fining them. (But that restaurant-bar can serve beers so long as they sell some dry meats and cheese.) All the while, deliveroo and others have started deciding who stays open after curfew, ostensibly based on sales — but who is so naive to think this isn’t crude extortion? Neighborhood restaurants suffer while fast-food chains and more leveraged restaurants thrive. This will have long-term effects for everyone. The city knows what’s happening and does nothing, in part because what can they do? They already lost control on the pandemic situation long ago. So who bears the weight? It is primarily a migrant population working illegally and for crumbs. It’s astounding. And what am I to do? I want to help the small restaurants in my neighborhood, but even they are squeezed by these greedy companies. I refuse to be complicit, but I know that hurts independent restaurateurs. A friend of mine runs a café and gets charged 30% per order by deliveroo. Recently deliveroo started a subscription service that provides free delivery. My friend sells a cookie for 3.5€ and has it delivered to someone nearby. The benefit of the doubt says that this person has an excellent reason. The pessimist in me indicts the state of tech and startups. The sooner investors, such as the two mentioned in this article, stop pumping up these short term profiteers with absurd capital, the sooner we can start investing in long term projects that improve lives. Instead, companies like deliveroo profit by exploiting illegal workers (with the complicity of the state) and encourage only the worst of human aspirations: deliver me my matcha cookie, and don’t be late, or I’ll give you a 1-star review! My worst fear is that more logistics services like this are on the horizon. The social fabric and environment in my city can’t handle it. We need long-term and sustainable investment and not another app for lazy people.
- abhinav22 6y ago
  Thank you, this expressed everything perfectly
knuthsat 6y ago
Why isn't Deliveroo innovating so much on the technical side that the gas/delivery time savings aren't making everyone satisfied? By now, they should have enough data to know who's going to order from where and using these predictions they can route the drivers/riders accordingly and price the delivery. By now, they should have algorithmic innovations related to vehicle routing problem, pickup & delivery and traveling salesman so that they can reward the drivers/riders more. Image that a single rider has a no-wait route where he's just picking up food and delivering but doing that in an efficient (not zig-zag across the city) way.
- SirHound 6y ago
  They do do all this. From my understanding it’s just a very hard problem.
  - knuthsat 6y ago
    Sounds like they just aren't innovating. The degree to which they have solved the issue obviously isn't enough.
    - usehackernews 6y ago
      You’re underestimating the complexity of the problem. Google Maps ETA’s are a simple problem compared to this because of the park and embark times & handoff variability. - Parking is different at every restaurant, some days you may get lucky and find a spot, others you have to park far away and walk. - A restaurant may be down staff on an given day and are late cooking the order. - Customer may live in a high-rise or gated community that requires security identification before entering. - Customer may not have a house number clearly visible making the house hard to find The actual driving route/ traveling time is the easy part. It’s the other variables that make this incredibly complex.
      - SirHound 6y ago
        The drivers also figure out what behaviour will maximise their business. Changes to the algo can have unintended consequences.
NicoJuicy 6y ago
Taking 30% of restaurants is really dispicable. No company should be allowed to profit from restaurants that are currently struggling to survive.
- renaudg 6y ago
  Well, they are the only lifeline that lets restaurants survive at the moment.
- nly 6y ago
  Apple and Google take 30% for less from apps developers
cortexio 6y ago
Im not a fan of deliveroo, but keep in mind, if they were that bad, they wouldnt have any employees nor customers. For all we know, this is a paid for article. Let reality play itself out and we'll see.
strong_opinions 6y ago
This is why we need a corporate death penalty, to destroy abusive companies like this. The company and all its investors and directors should have all their assets seized, even those not related to the company. In addition to any relevant criminal charges being applied. If we had a few instances of this occurring for the worst offenders, you can be sure other companies would swiftly clean up their acts.
- JumpCrisscross 6y ago
  > company and all its investors and directors should have all their assets seized This is expropriation. Its track record is poor. It results in government cronies applying the “death penalty” to people it doesn’t like to take their stuff. To the degree it exists in America (for individuals), it’s called civil forfeiture and is roundly criticised. If you don’t give the assets to the government after seizure, and instead auction them off, the original investors would repurchase them. This redistributes assets from shareholders who do not have access to the auction to those who do. Again, cronyism. Corporate “death penalties” are either stupid or an invitation for corruption. Punishing individual actors, individual decision makers, is less risky and more effective.
  - dencodev 6y ago
    Civil forfeiture has a bad track record because it's used on poor and lower class people 99.999% of the time. I imagine if it was only used on rich people it'd have a stellar reputation.
    - JumpCrisscross 6y ago
      > if it was only used on rich people it'd have a stellar reputation We've tried this, a lot, in Latin America. It doesn't work. Throwing out the rule of law because you don't like a group of people is a short-term strategy.
      - dencodev 6y ago
        Seems to be a long term strategy against poor people in America
yyy888sss 6y ago
It's probably also because they couldn't turn a profit in a year where everyone stayed at home, the market conditions should have been perfect for a delivery company.
deleted 6y ago
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Traster 6y ago
>"We wouldn't be comfortable that the way in which its workforce is employed is sustainable." This doesn't sound like they're concerned over workers' rights. It sounds like they're concerned that deliveroo won't be able to keep exploiting gaps in employment legislation to generate profit.
snake_plissken 6y ago
For some odd reason I have found it very interesting that on this particular story, my initial reaction from the headline (about what this article will be about), was completely the opposite to what the contents of the article. Knowing nothing about Deliveroo but suspecting it was a gig delivery service, I expected this to be about big investors shunning Deliveroo because it was going to pay their workers too much and hence not be profitable enough.
srg0 6y ago
> Big investors shun Deliveroo over workers' rights It's more likely over Deliveroo fines which are coming. Italy demands €773M in fines for unpaid social security contributions. Italy won't be the only country.
throwaway132441 6y ago
Just to add my 2 cents here as a Deliveroo rider (bicycle) in the UK. I ride only a few hours a week on Friday and Saturday evenings for extra money. For this purpose it's good for me and the flexibility suits me. However, I would prefer to do a few more hours on weekday evenings but don't bother because every time I have tried recently I end up sitting in the cold with no orders coming in. This is the primary problem with Deliveroo in terms of workers rights - they push the cost of supply/demand asymmetry entirely onto the "worker". What's worse is you will often be told that it is "busy" or at least "moderate" in terms of demand in a particular area but then can't get any work when you arrive (and if you don't get orders, you don't get paid). A few weeks ago I found myself in a supposedly "busy" area not receiving orders; in my field of view I counted 14 other Deliveroo riders on bicycles - when there are so many other people it's no surprise that you can't get order, even if demand is high. Ultimately, Deliveroo can increase supply as much as they want and it doesn't really cost them as the riders who wait around and don't get orders just don't get paid. The claims they make through the app about demand in a given area are often misleading as a result of the asymmetry, but it's unpredictable enough that you can never really tell. At this point I only work the hours that are almost always profitable and don't bother with the rest. This is okay for me as I only need a small amount of extra money anyway but if I really needed the money it would be a lot more stressful. This is from the perspective of a rider on a bicycle, my understanding is that things are generally a bit better for those on mopeds. I know a lot of riders use multiple apps like Uber Eats, Just Eat, etc. too which makes things better. I'm personally a bit sceptical of applying the standard workers rights legislation to these companies - it makes more sense for Uber because most of the drivers do it as their full time job but I think you would end up destroying some of the benefits too (like flexibility) with Deliveroo. I do think something needs to be done though. Not sure how you would design it but I think any legislation should focus on the way they exploit the supply/demand asymmetry and make semi-fraudulent claims about demand to riders. We have the "freedom" to choose hours but there is no freedom around the information needed to make reasonable estimates of how much money you might make if you choose to go out and work. The actual job itself is fine as long as you make money, it requires almost zero cognitive ability and is good exercise.

104 points by AndrewDucker 6y ago

Holy crap, is this ethical investing? Or are they foreseeing legal issues that make it a bad investment... > the way the company employs its riders is not socially acceptable, and poses a risk to its future. Ah, it's the latter.

agent008t 6y ago
Ideally, you want the former and the latter to be equivalent.
- VBprogrammer 6y ago
  An interesting take on this is that essentially we are seeing the results of strong unionisation in the taxi industry leading to cross polenation of protections in related industries (or at least investor fear that it may happen).
- londons_explore 6y ago
  The former and the latter can be made equivalent if unethical things can be made retrospectively illegal. It's bad for business to do so, but it's happening more and more frequently that things like not giving your workers sufficient breaks/pension contributions/healthcare/etc can after-the-fact be corrected leaving a big liability for that kind of behaviour. Obviously any country that gets a reputation for changing laws after-the-fact will soon lose all outside investment... So it isn't a clear win.
- notahacker 6y ago
  In this case, to an extent, they are. Deliveroo won one court case arguing its delivery drivers were contractors rather than employees being paid less than minimum wage, but after Uber lost in a higher court, the future of its business model depends on whether the ability to reject orders is perceived as sufficient freedom to negotiate independent contractor rates.
Milner08 6y ago
Yes, I'd say considering Uber in the UK has been force to start paying minimum wage and giving paid holidays to its drivers I imagine they think the same is very likely for Deliveroo.
- varispeed 6y ago
  If drivers get hired on inside IR35 contracts, they won't have to be paid minimum wage whilst being treated just like regular employees. They legally won't have any employment rights. The changes in law come to force in April.
Mauricebranagh 6y ago
I suspect the potential legal issues might be the real reason.
Closi 6y ago
Call me sceptical, but these same companies that say one asset is 'unethical' will invest in another that relies on slave labour in another market as soon as they see a buck to be made. They probably forecast legal issues that make it a bad investment, and then will say it's not socially acceptable for the PR. I mean, I doubt that Deliveroo labour standards are actually worse, for example, than a cambodian clothing manufacturer which was scored as one of the worst in the world for a lack of "forced labour safeguards". Aberdeen Standard (one of the companies criticising deliverro) proudly states on their website that their investments in this manufacturer gave great returns for their innvestors, while poo-pooing Deliveroo for labour standards. Hmm, I detect a possible contradiction...
- KptMarchewa 6y ago
  > Call me sceptical, but these same companies that say one asset is 'unethical' will invest in another that relies on slave labour in another market as soon as they see a buck to be made. In their eyes, slave labor is unethical in western countries and business as usual in rest of the world.
  - TeMPOraL 6y ago
    I think it's the same for them in both cases, just in western countries there are laws they could run afoul of, and possible PR damage to manage.
vesinisa 6y ago
I am not buying it. Food delivery is a simple menial job akin to cleaning. It will always be done by the lowest bidder. Regulation may affect the minimum driver compensation positively in the short term, but not too much before these delivery companies themselves become infeasible. However, the food delivery companies have already managed to bootstrap such massive market demand for the service they offer that it's not anymore realistic the industry would be regulated to death at this point. In the long term, the driver compensation will also go up - either as a result of either regulation or – more likely – driver collective action. Meanwhile, these investment funds are missing out on the birth of new basic service industry, and by extension guilty of mismanaging their customers' funds.

colesantiago 6y ago

This time the big investors (mainly Amazon) and the founder of Deliveroo have actually admitted their intention to sell before they list this stock. Oh and that 'generous' £50m stock allocation they are offering the public [0] before the majority investors all sell, combined with a heavily loss making company AND the historic employee classification that the supreme court ruled against Uber [1] recently in the UK? Cocktail for a blindingly obvious scam in broad daylight, and they know it. Just look at how $DASH turned out. This is an easy no buy even when the scam has been admitted to the public and retail investors. Take heed this advice. [0] https://www.altfi.com/article/7672_deliveroo-ipo-kicks-off-with-50m-primary-bid-deal https://www.altfi.com/article/7672_deliveroo-ipo-kicks-off-w... [1] https://www.bbc.co.uk/news/business-56123668 https://www.bbc.co.uk/news/business-56123668

varispeed 6y ago
> the historic employee classification that the supreme court ruled against Uber When IR35 changes come to life in April, this will not be relevant, as Uber and others can just issue in-scope contracts to workers and bypass employment laws altogether, legally.
- Nextgrid 6y ago
  In-scope contracts still mean there's a higher tax impact which means the delivery platforms will need to compensate.
  - varispeed 6y ago
    Unlikely, because where do those workers go? It is the same in the IT market - contracts changed to in-scope without significant bump.
- pjc50 6y ago
  Could somebody explain this? It looks to me that IR35 is changing against "disguised employment" specifically to get more income tax by declaring more people to be employees.

abhinav22 6y ago

One of the most unethical companies that I know. Pushes restaurants to the brink of bankruptcy and pays their riders close to nothing. Abusive human rights in third world countries (much worse than how they treat riders in UK and other markets) Tried to manipulate pricing & food choices with various algorithms (hiding restaurants, making them pay for screen estate) Trying to run ghost kitchens and further capture market share / margin with poor quality ingredients and misleading advertising (nice photos make it look like a restaurant but it’s some sweat shop instead, likely with unhygienic conditions and slave labor) With the pandemic receeding, I LOVE walking in fresh air and eating fresh food at a restaurant On a general note, the world is so beautiful and needs to be enjoyed in person. All these apps are a cheap and manipulative substitution that really reduce quality of life for many. I’m looking at you Facebook, Instagram, LinkedIn, Deliveroo etc

FartyMcFarter 6y ago
> Trying to run ghost kitchens Is a ghost kitchen that different from the kitchen in a regular restaurant? Either one doesn't strike me as the best working environment, not necessarily anyway.
- Tsiklon 6y ago
  A ghost kitchen is a kitchen associated with a restaurant that doesn’t serve walk-in customers or have the capacity to allow customers to sit-in. Often times these kitchens are anonymous looking from the outside, often located outside of the town centre In the UK they should be beholden to the same hygiene standards as any other food preparation business Some of these kitchens have their own branding and are not associated with a restaurant, but if you know your local area and see some restaurants which you don’t recognise on deliveroo or the other food delivery services, it’s possible that they are a ghost kitchen.
- tweetle_beetle 6y ago
  The Guardian ran a few alarmist articles on them going back a while which might have sparked some of the outrage, including this opinion piece [1]. It turns out these "dark satanic mills" are often: hot, without windows and cold in winter. I don't advocate for bad working conditions, but it must be hard for anyone who has ever worked in a kitchen to keep a straight face when reading that. Even many Michelin starred kitchens are horrible environments. [1] https://www.theguardian.com/commentisfree/2018/oct/09/dark-kitchens-satanic-mills-deliveroo https://www.theguardian.com/commentisfree/2018/oct/09/dark-k... Edit: This isn't meant to be whataboutism, just pointing out that a "ghost kitchen" is only really different from a normal kitchen in its business structure. By and large, catering is not, and has never been, a glamorous industry. If you want to stop kitchens being difficult places to work, that's a worthwhile cause, but much, much bigger than Deliveroo.

LatteLazy 6y ago

2 Big investors, out of how many thousand?

adrianb 6y ago
Indeed, I wouldn't look too much into this. The article is more a part of the media's anti-tech campaign and less an indication of the overall investor sentiment. We'll see in the IPO how it actually performs.
- AlexandrB 6y ago
  What kind of "tech" is Deliveroo exactly? Did they invent some kind of new graph theory or search algorithm that enabled their business? The only "tech" seems to be in working around employment law. This is like calling a sweatshop "tech" because they "innovated" a way for employees to be paid below minimum wage.
  - colesantiago 6y ago
    Just an app and website, just like Just Eat, Uber Eats and Foodhub. Can place an order by just calling them, most restaurants display their phone numbers online. Shockingly, yellow pages still exist in the UK even online.
  - deleted 6y ago
    [deleted]

midasuni 6y ago

I don’t get these platforms. If I want a delivery I phone my local reaturant I want to cook for me and ask them to deliver. (Maybe they have a website instead) The relationship is between me and the restaurant, whether it’s the local curryhouse (Indian Ocean) or dominos. They may not deliver at all, or they may have a deal with a local taxi firm, or employ their own drivers, that’s upto them. I dont care where they buy knives from, or foil boxes, or prawn crackers, or delivery service. If I dont like the food or the delivery time or another aspect of the service I go elsewhere. Why would I want to replace that with a middleman who can squeeze both sides and offers very little. I know my favourite restaurants, I have a relationship with them. The bulk of the value is mainly at the restaurant, not the delivery or the ordering process. Compare with uber which is identical to any other minicab firm in the U.K., but due to a good app also improves on the value of a hailable taxi, and that’s the difference. I want to do business with the company providing value, not one connecting me via a proxy. It would be like ordering a takeaway in the 80s through the GPO operator, who would take my order and pass it on. Why would I want that?

vesinisa 6y ago
You are an exception then. Most people are compelled by an app that lets them see what restaurants deliver near them, and makes the ordering process really easy - no need for awkward phone calls or the hassle of uncertainty about when will your food actually arrive. The consumer segment who see value in this service is enough large that restaurants will sign up for Deliveroo/whatever to not miss out on the segment, even if that comes with a small premium to the platform. Still, if you want to support your local restaurant you should always order directly with them to cut out the middle man.
- petercooper 6y ago
  Agreed. People's reluctance to actually talk on the phone or to manage uncertainty is often overlooked in the popularity of apps like Uber, Deliveroo, Just Eat, et al. People will, to an extent, trade extra money to not have the ambiguity of human communications placed in the middle of a transaction.

obayesshelton 6y ago

This is interesting and slightly off-topic but relevant. I see Deliveroo, Uber Eats etc in a very similar situation to Amazon Prime. In the UK nobody really offered same day delivery for goods other than Amazon. Not many restaurants had websites or a unified payment processor (this is key for me). Now a lot of stores and especially Argos do same day deliver and have great product and quality control. I see Prime loosing out. I now see that all the stores I buy food from off Deliveroo giving me a voucher code for 20% off id I go direct. I feel that Deliveroo and Prime had an edge whilst the supplier caught up.

carmen_sandiego 6y ago
I disagree. I don't want to go to multiple sources for the same reasons I don't want 20 different on-demand video streaming subscriptions. The difference is, content exclusives are normalized now, so Amazon Prime Video, Disney, or whoever can try to entice me away with the content I like. Argos is not going to get exclusive rights to supply a certain product, so everything will always be on Amazon and I'm unlikely to leave. Did you even have problems with prime? I'm highly skeptical that Argos offers a better service. I'm inclined to think of Argos as generally stodgy, just from a superficial point of view. Maybe they've changed, but it means I'm unlikely to give them a shot. I'm just reminded of their terrible in-store experience: painfully leafing through the catalogue, typing the SKU into their spongy/sticky keypad, waiting around to pay, waiting around again to collect. On the other hand, I have good experiences with Amazon. I know what will happen if something goes wrong--they will do right by me, generally. Same with Deliveroo. I know how it works for every order, regardless of where I order from. Switching that to a separate consideration for every restaurant is mental overhead I don't want to deal with.
- obayesshelton 6y ago
  Hey, great response and interesting talking points there. I agree with the "20 different streaming services" I think somebody (ROKU have started) need to address this pain point. I do agree with all of your other points as well. Just based on your reply I could guess your age haha I also remember the endless flicking of pages in store. I kinda liked the hunt!

varispeed 6y ago

From April situation of workers will be legitimised as government voted in no rights employment in the form of IR35 changes. This means Deliveroo or other company can issue an in-scope contracts for workers and basically treat them the same as if they were employees, but they won't have any employment rights - no holiday pay, no notice, no right to unionise and so on. Even if a driver gets pregnant, they can be terminated on the spot without consequences. On top of that, the "employees" will have to pay the same tax as if they were actually employed and won't be able realistically to claim any business costs.

vonwoodson 6y ago
Glad to see that America still excels at exporting our culture. Here they call this practice “Right to Work”.
varispeed 6y ago
There is a step-by-step guide how employers can transform their existing staff into no rights employees using the new rules: https://norightsemployee.uk/step-by-step https://norightsemployee.uk/step-by-step

gillesjacobs 6y ago

In 2017-2018, friends of mine became delivery cyclists in-between jobs for UberEats and Deliveroo, I also have a friend who went to a local delivery business. Deliveroo paid best slightly above hourly minimum wage, UberEats pulled the rug from under their drivers when changing from hourly pay to per-delivery pay. The local small business was the worst paying, paid less than minimum hourly wage. Deliveroo and UberEats back then were fine back then as a temporary in-between job or to earn on the side when they were burning through venture capital and fearing strict local European worker rights law. In Brussels, they definitely paid better then many local delivery companies. Now that they are well-established and some European countries have legal frameworks for "the sharing/gig economy", they are squeezing both sides. The delivery workers are pushed by lowering rates, lowering delivery time, unfair algorithmic task asssignments, etc. Restaurants are being squeezed by increased rates. Personally, I try to order straight from the restaurant and I seek out restaurants that employ their own drivers. There are still plenty of those around here, but that number is decreasing.

NicoJuicy 6y ago
I just order directly and go for a walk to get the food ( or by bicycle). Not the worst thing to do to spend some time outdoor these days.

xmdx 6y ago

From an investors point of view the last thing you want is an Uber situation, where you have to classify all drivers as employees and take on a new massive cost. It's one of their biggest risks at the moment. From a human point of view I hope that does happen. They even admit it's a huge problem with their profitability plan: https://london.eater.com/2021/3/24/22347981/deliveroo-delivery-uk-riders-ipo-valuation https://london.eater.com/2021/3/24/22347981/deliveroo-delive...

vonwoodson 6y ago
Worse than that: Uber has yet to turn a profit!! [1] [2] Even treating its “independent contractors” like d09(c)h!7 isn’t enough to make the business profitable. As best I can tell, investors are literally investing in the idea... no, hope, that companies can somehow exist without real employees. That they can Pray Away the Proletariat. [1] : https://morningology.com/four-top-reasons-why-uber-isnt-profitable/111465/ https://morningology.com/four-top-reasons-why-uber-isnt-prof... [2] : https://www.forbes.com/sites/bethkindig/2020/03/25/can-uber-become-profitable-this-year-deep-dive-analysis/?sh=3c50d18f396d https://www.forbes.com/sites/bethkindig/2020/03/25/can-uber-...
- xmdx 6y ago
  I don't think immediate profitability is a concern for Uber, investors are all in on future profits when/if they move to autonomous cars. The profitability is far greater then, rather than now. I don't know how deliveroo future profits look in comparison.
  - KptMarchewa 6y ago
    They sold autonomous car division few months ago. If they won't own the technology, then Uber has no moat when it comes to service - people generally use cheapest ride hailing app.

phkahler 6y ago

>> The delivery company hopes to be valued at up to £8.8bn when it lists its shares in April. Does anyone realize that high valuations are not in the long term interest of a company? That only benefits current investors. Never the employees, suppliers, or customers.

zahma 6y ago

In my EU city, it is quite clear that these exploited workers are the major delivery service of food to the masses. The curfew means that even while I want to, I am not allowed to pick up pizza from the spot down the block from me because the restaurant is rightfully afraid of the city fining them. (But that restaurant-bar can serve beers so long as they sell some dry meats and cheese.) All the while, deliveroo and others have started deciding who stays open after curfew, ostensibly based on sales — but who is so naive to think this isn’t crude extortion? Neighborhood restaurants suffer while fast-food chains and more leveraged restaurants thrive. This will have long-term effects for everyone. The city knows what’s happening and does nothing, in part because what can they do? They already lost control on the pandemic situation long ago. So who bears the weight? It is primarily a migrant population working illegally and for crumbs. It’s astounding. And what am I to do? I want to help the small restaurants in my neighborhood, but even they are squeezed by these greedy companies. I refuse to be complicit, but I know that hurts independent restaurateurs. A friend of mine runs a café and gets charged 30% per order by deliveroo. Recently deliveroo started a subscription service that provides free delivery. My friend sells a cookie for 3.5€ and has it delivered to someone nearby. The benefit of the doubt says that this person has an excellent reason. The pessimist in me indicts the state of tech and startups. The sooner investors, such as the two mentioned in this article, stop pumping up these short term profiteers with absurd capital, the sooner we can start investing in long term projects that improve lives. Instead, companies like deliveroo profit by exploiting illegal workers (with the complicity of the state) and encourage only the worst of human aspirations: deliver me my matcha cookie, and don’t be late, or I’ll give you a 1-star review! My worst fear is that more logistics services like this are on the horizon. The social fabric and environment in my city can’t handle it. We need long-term and sustainable investment and not another app for lazy people.

abhinav22 6y ago
Thank you, this expressed everything perfectly

knuthsat 6y ago

Why isn't Deliveroo innovating so much on the technical side that the gas/delivery time savings aren't making everyone satisfied? By now, they should have enough data to know who's going to order from where and using these predictions they can route the drivers/riders accordingly and price the delivery. By now, they should have algorithmic innovations related to vehicle routing problem, pickup & delivery and traveling salesman so that they can reward the drivers/riders more. Image that a single rider has a no-wait route where he's just picking up food and delivering but doing that in an efficient (not zig-zag across the city) way.

SirHound 6y ago
They do do all this. From my understanding it’s just a very hard problem.
- knuthsat 6y ago
  Sounds like they just aren't innovating. The degree to which they have solved the issue obviously isn't enough.
  - usehackernews 6y ago
    You’re underestimating the complexity of the problem. Google Maps ETA’s are a simple problem compared to this because of the park and embark times & handoff variability. - Parking is different at every restaurant, some days you may get lucky and find a spot, others you have to park far away and walk. - A restaurant may be down staff on an given day and are late cooking the order. - Customer may live in a high-rise or gated community that requires security identification before entering. - Customer may not have a house number clearly visible making the house hard to find The actual driving route/ traveling time is the easy part. It’s the other variables that make this incredibly complex.
    - SirHound 6y ago
      The drivers also figure out what behaviour will maximise their business. Changes to the algo can have unintended consequences.

NicoJuicy 6y ago

Taking 30% of restaurants is really dispicable. No company should be allowed to profit from restaurants that are currently struggling to survive.

renaudg 6y ago
Well, they are the only lifeline that lets restaurants survive at the moment.
nly 6y ago
Apple and Google take 30% for less from apps developers

cortexio 6y ago

Im not a fan of deliveroo, but keep in mind, if they were that bad, they wouldnt have any employees nor customers. For all we know, this is a paid for article. Let reality play itself out and we'll see.

strong_opinions 6y ago

This is why we need a corporate death penalty, to destroy abusive companies like this. The company and all its investors and directors should have all their assets seized, even those not related to the company. In addition to any relevant criminal charges being applied. If we had a few instances of this occurring for the worst offenders, you can be sure other companies would swiftly clean up their acts.

JumpCrisscross 6y ago
> company and all its investors and directors should have all their assets seized This is expropriation. Its track record is poor. It results in government cronies applying the “death penalty” to people it doesn’t like to take their stuff. To the degree it exists in America (for individuals), it’s called civil forfeiture and is roundly criticised. If you don’t give the assets to the government after seizure, and instead auction them off, the original investors would repurchase them. This redistributes assets from shareholders who do not have access to the auction to those who do. Again, cronyism. Corporate “death penalties” are either stupid or an invitation for corruption. Punishing individual actors, individual decision makers, is less risky and more effective.
- dencodev 6y ago
  Civil forfeiture has a bad track record because it's used on poor and lower class people 99.999% of the time. I imagine if it was only used on rich people it'd have a stellar reputation.
  - JumpCrisscross 6y ago
    > if it was only used on rich people it'd have a stellar reputation We've tried this, a lot, in Latin America. It doesn't work. Throwing out the rule of law because you don't like a group of people is a short-term strategy.
    - dencodev 6y ago
      Seems to be a long term strategy against poor people in America

yyy888sss 6y ago

It's probably also because they couldn't turn a profit in a year where everyone stayed at home, the market conditions should have been perfect for a delivery company.

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Traster 6y ago

>"We wouldn't be comfortable that the way in which its workforce is employed is sustainable." This doesn't sound like they're concerned over workers' rights. It sounds like they're concerned that deliveroo won't be able to keep exploiting gaps in employment legislation to generate profit.

snake_plissken 6y ago

For some odd reason I have found it very interesting that on this particular story, my initial reaction from the headline (about what this article will be about), was completely the opposite to what the contents of the article. Knowing nothing about Deliveroo but suspecting it was a gig delivery service, I expected this to be about big investors shunning Deliveroo because it was going to pay their workers too much and hence not be profitable enough.

srg0 6y ago

> Big investors shun Deliveroo over workers' rights It's more likely over Deliveroo fines which are coming. Italy demands €773M in fines for unpaid social security contributions. Italy won't be the only country.

throwaway132441 6y ago

Just to add my 2 cents here as a Deliveroo rider (bicycle) in the UK. I ride only a few hours a week on Friday and Saturday evenings for extra money. For this purpose it's good for me and the flexibility suits me. However, I would prefer to do a few more hours on weekday evenings but don't bother because every time I have tried recently I end up sitting in the cold with no orders coming in. This is the primary problem with Deliveroo in terms of workers rights - they push the cost of supply/demand asymmetry entirely onto the "worker". What's worse is you will often be told that it is "busy" or at least "moderate" in terms of demand in a particular area but then can't get any work when you arrive (and if you don't get orders, you don't get paid). A few weeks ago I found myself in a supposedly "busy" area not receiving orders; in my field of view I counted 14 other Deliveroo riders on bicycles - when there are so many other people it's no surprise that you can't get order, even if demand is high. Ultimately, Deliveroo can increase supply as much as they want and it doesn't really cost them as the riders who wait around and don't get orders just don't get paid. The claims they make through the app about demand in a given area are often misleading as a result of the asymmetry, but it's unpredictable enough that you can never really tell. At this point I only work the hours that are almost always profitable and don't bother with the rest. This is okay for me as I only need a small amount of extra money anyway but if I really needed the money it would be a lot more stressful. This is from the perspective of a rider on a bicycle, my understanding is that things are generally a bit better for those on mopeds. I know a lot of riders use multiple apps like Uber Eats, Just Eat, etc. too which makes things better. I'm personally a bit sceptical of applying the standard workers rights legislation to these companies - it makes more sense for Uber because most of the drivers do it as their full time job but I think you would end up destroying some of the benefits too (like flexibility) with Deliveroo. I do think something needs to be done though. Not sure how you would design it but I think any legislation should focus on the way they exploit the supply/demand asymmetry and make semi-fraudulent claims about demand to riders. We have the "freedom" to choose hours but there is no freedom around the information needed to make reasonable estimates of how much money you might make if you choose to go out and work. The actual job itself is fine as long as you make money, it requires almost zero cognitive ability and is good exercise.