Deliveroo PLC (LSE:ROO) faces some significant headwinds on its path to profitability as research finds customers in Britain continue to reduce spending on takeaways.
In February, volumes in the UK dropped by close to 13% year-on-year, research from industry trade body CGA found.
Those still ordering were also looking to save, as the value of deliveries dropped by 10%.
Karl Chessell at CGA said: “The research consistently shows that people want to prioritise the affordable treats of restaurant meals and takeaway spending may only increase when household bills and inflation come down.
“In the meantime, we can expect more softening in the at-home market.”
The 10-year-old company has been edging closer to profitability over the past few years, but every year since listing in 2021 has seen a loss.
In the second half of 2022, it announced it made £6.5mln in underlying profits but still finished with a loss of £45mln for the full year.
However, questions arise as to whether it can reach profitability if sales continue to slow.
The subdued UK takeaway market caused the company to cut more than 350 jobs in February, with British-based workers seeing the majority of the layoffs.
Deliveroo is still forecasting underlying profits in the range of £20mln-£50mln for calendar 2023, after having broadened deliveries to groceries and launching in countries such as Qatar.
At 90p, shares remain two-thirds lower than the 282p listing price, having shed 10% in the last six months.