Deliveroo’s 2,000 head office permanent staff will benefit from a £10 million employee stock option pot, it has been revealed by Sky News. The news was delivered in an all company email earlier this week.
The food delivery company, valued at $2 billion last year and launched in London in 2013, has been growing quickly, deploying its playbook in 200 cities all over the UK and rest of the world.
Staff stock options typically materialise after about four or five years or if a company reaches a public floatation, and hinges on employees staying with the company. Ambitious and fast growing tech companies in particular have been eager to incentivise staff amid what is a highly competitive market for talent. Deliveroo is slugging it out with other tech companies for software engineers, developers, data scientists, designers among other roles.
Founder and CEO Will Shu said the decision was made to encourage employees “to be owners in Deliveroo and to have a real stake in the company’s future as we expand and grow.”
However, it has highlighted the gulf in status between head office, ‘professional’ employees and the riders on motorbikes and bicycles who deliver food on behalf of Deliveroo without contracts. The share scheme announced last week does not extend to riders. The company has 15,000 riders in the UK, bracketed as “self-employed,” on its books.
Deliveroo claims riders have seen their average pay edge up through a mix of hourly pay and per-drop fees. A spokesman claimed the average rider in the UK makes £10.50 per hour and works 15 hours in a week, making a monthly pay of £630 before tax. It claimed some drivers working on fees per drop earned more, but didn’t disclose why some riders were on more advantageous terms, and how many were.
Deliveroo has also tried to introduce better terms such as insurance and sick pay to riders.
Restaurants meanwhile have seen the volume of food they sell on Deliveroo surge in recent months, but commissions paid to Deliveroo have jumped too — typically around 30% of the total bill. Many restaurants have expressed their concern that although they are selling more, the increase in commissions has significantly eroded their profit margin.
Through the share scheme, Deliveroo appears to have found a ‘win-win’ mechanism for its head office employees. However, it also appears to be getting harder to grow with a profitable model without alienating the two critical constituent that form the backbone of its business: riders and restaurants.