New Deliveroo service fee to include customers with free delivery subscription

Deliveroo is to start charging a “service fee” for every delivery for all customers from next month, including those signed up to its unlimited free delivery subscription service.

The change comes as the online food platform prepares an overhaul of its delivery fee model to a dynamic pricing structure where the cost is based on how far away customers order their food from.

A spokesman for the business said: “Next week Deliveroo is introducing better delivery fees for customers. For the vast majority, delivery fees will be lower and in many areas will start from as low as 99p.”

But heavy users signed up to the firm’s Plus service, which was launched two years ago with the offer of unlimited free deliveries for £7.99 a month, are expected to see costs increase.

Plus customers were informed on Thursday they will be charged 49p for every delivery they order. This is in addition to the £11.49-a-month subscription for the service, which also includes special offers and exclusive deals.

The subscription price was raised 44% a year ago from £7.99 a month.

In an email sent to customers, Deliveroo said: “From February, all orders – for Plus subscribers and non-Plus subscribers – will include a 49p service fee. This helps us give you 24/7 customer service and keep improving the app.”

Other changes will also see a “minimum spend” introduced to ensure “you don’t pay any delivery fee, as long as the order meets the minimum spend for that restaurant – no matter how far the delivery is or how often you order”.

Rival Uber Eats already uses a dynamic pricing model based on distance, although it does not have a subscription service.

The Deliveroo spokesman added: “Like other Deliveroo customers, those with Plus will see a small service fee. We will use this to bring customers more exciting restaurants, keep improving our service and provide 24/7 customer support.”

Deliveroo cycle rider
Deliveroo customers were told of the change on Thursday (PA)

Deliveroo is attempting to expand to a scale that is profitable, having failed to turn a profit since launching in the UK in 2013.

The most recent results showed revenues have been rising – up 72% in 2018 to £476 million – although losses increased 16% to £232 million.

Investors continue to be impressed with the business though, despite no guidance on when bosses expect to turn a profit.

In May last year, the company revealed it had raised 575 million US dollars (£439 million), with Amazon as the largest investor from the fundraising round.

But the deal is under investigation by the Competition and Markets Authority (CMA), with officials looking at whether the two companies working together could lead to higher prices for customers.

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