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Deliveroo Lobbies Government on Behalf of Restaurants (It Plans to Cut Out)

The delivery platform wants the government to reconsider business rates

Food delivery platform Deliveroo has encouraged the UK government to reconsider restaurant business rates Ellie Foreman-Peck/elliefp

Deliveroo is lobbying the U.K. government to “give restaurants a break and simplify burdensome business rates.”

The restaurant delivery giant — last week the subject of a parliamentary inquiry into its employment practices following a High Court defeat — conducted research with business rates specialist (and listed financial partner) Gerald Eve to investigate the effect of rising business rates on restaurants. The research found that 41,000 U.K. restaurants will pay £1.5 billion in business rates over two years. This averages £36,585 per restaurant: in reality, rates are scaled according to size of premises, location, and “poundage”, a value estimation determined by the government’s Valuation Office Agency (VOA).

The research was prompted by a survey of Deliveroo’s restaurant “partners” — the restaurants from which the platform delivers. The partners that responded cited rising business rates as one of the “top three concerns holding back the restaurant industry.” Of the platform’s more than 10,000 restaurants, “well over 500” (0.05 percent) responded, according to a Deliveroo spokesperson. Rising business rates ranked third of the three concerns. The two most pressing concerns were “labour availability” and “rising food costs”, both side-effects of the lumbering towards Brexit that could close up to 20 percent of U.K. restaurants.

At a time when the U.K. eating out sector is growing at its slowest rate for five years, while JustEat and Deliveroo announce year-on-year revenue increases and float IPOs, Deliveroo’s positioning as a saviour for a sector that it has both disrupted and redefined could be branded as opportunistic. This is a company that is also trying to incubate delivery-only sites that are simply not profitable for many restaurants, double its vendor base, and present investors with profitability forecasts that hinge on — eventually — eliminating restaurants altogether. Its long-term strategy is, after all, predicated on people going to restaurants less and less. So, while this agitation on behalf of the restaurant industry is understandable, given restaurants need significant support to even consider adding new sales channels, it also merits questioning: is Deliveroo really doing this for struggling restaurants, or is it just good PR?

When asked for comment on how this lobbying would square with those profitability plans, Deliveroo said: “We work with lots of amazing restaurants. This gives us some convening power so it’s only natural we would used this to advocate on behalf of and support restaurants when it comes to government/industry wide issues.”