British food delivery company Deliveroo warned sales growth would be at the lower end of its previous guidance, as households cut back on takeaways due to rising prices.
Despite the worsening outlook, Deliveroo, which competes with Just Eat Takeaway and Uber Eats, also slightly upgraded its adjusted earnings (EBITDA) margin guidance on Friday 21 October, helped by lower marketing spend.
The group is aiming for adjusted earnings (EBITDA) breakeven in late 2023 to early 2024 and said that it was confident it could adapt to the worsening economic outlook where consumers are grappling with higher food and energy bills.
Get a FREE Digital Subscription!Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
Shares in Deliveroo, down 60% this year, rose 4% to 84 pence in early deals on Friday 21 October.
Deliveroo said that gross transaction value (GTV) growth was now expected to be in the range of 4-8% in constant currency, the lower part of the previously announced 4-12% range, already downgraded from 15%-25% in July.
"While the drop in GTV guidance is a negative, given the shifting focus of the industry towards profitability, the improvement in margin should be taken well," Goodbody analysts said.
In its biggest UK and Ireland market, Deliveroo posted GTV growth of 11%, boosted by the addition of McDonalds to its offering, while its performance in its international markets in Europe, the Middle East and Asia Pacific dragged.
The impact of economic headwinds plus the seasonal effect of summer, when people's routines change, meant that GTV contracted by 5% in the three months to the end of September compared to the previous quarter, it said.
GTV per order in the latest period was up 6% compared to the same period last year, showing the impact of price inflation, and orders were down 1% in a sign of the difficult consumer environment.
Deliveroo announced on Wednesday 19 October it would pull out of the Netherlands on 30 November after it failed to gain sufficient local market share.