Rappi and Deliveroo: What Technology Brings to Australia and LatAm Food Sectors

The Australian tech startup scene is blossoming. We’re already seeing some big successes coming out of the region. For example, online collaboration platform Atlassian is now turning over AU$200 million annually at a valuation of around AU$3 billion. Then there’s email marketing company Campaign Monitor, which pulled in a cool AU$250 million for its debut funding round in April.

Over the last year, the startup sector has seen around AU$300 million in funding in Australian tech companies.

Food delivery apps like Rappi and Deliveroo offer convenience typically only found in the 'fast food' area of the sector, connecting consumers with restaurants that don't offer delivery services.
Food delivery apps offer convenience typically only found in the ‘fast food’ area of the sector, connecting consumers with restaurants that don’t offer delivery services.

Consider a tech startup in the food sector

Over the last five years, the Latin America tech industry has started to gain a reputation as a solid startup launchpad. It’s tempting more local founders to stay closer to home, and more foreign founders to search for new technological opportunities. 

The two regions boast a range of tech companies poised to disrupt everything from education to fashion. This is no different from the food sector, as startups begin scratching the surface of food technology and e-commerce potential. Food delivery apps like Rappi and Deliveroo offer convenience typically only found in the ‘fast food’ area of the sector, connecting consumers with restaurants that don’t offer delivery services. This way, customers can enjoy both convenience and healthy food in their delivery choices. We look at the impact innovative and creative techniques such as these examples have on the food sector in Australia and Latin America.

How does Deliveroo contribute to the economy?

The main business Deliveroo conducts consists of enabling people to order food for delivery from restaurants that do not offer their own delivery service. By means of a middle-man, the food gets delivered from the restaurant to a person’s doorstep. This value is delivered through the use of the Deliveroo app.

Deliveroo has recently released new independent research into the company’s contribution to the Australian economy. This is revealing economic benefits to the Australian restaurant sector.

Contribution in numbers

The report has found the British startup supported AU$452 million in revenue growth and AU$209 million in the gross domestic product (GDP) in Australia. Moreover, it contributed to the creation of nearly 8,000 additional jobs in the restaurant sector. These jobs are in addition to the work Deliveroo creates for the 6,500 self-employed riders who choose to ride with Deliveroo, as well as an Australian office with 140 staff.

The report also found that during the 2017/2018 financial year Deliveroo’s Australian operations supported AU$61 million in employee tax revenue and AU$59 million in corporation tax revenue. This has all been injected into Australia. This is tax paid by Deliveroo’s direct employees, restaurant partners, and their suppliers as a result of Deliveroo’s spending in Australia.

Side-effects of good business

Besides Deliveroo and the Australian tax system profiting from its success, the company’s partners are profiting too. The report shows how Deliveroo helps restaurants to grow their businesses by enabling them to reach new customers they otherwise would not be able to. This is leading to a better business environment for the whole food sector in Australia. According to Capital Economics, Deliveroo has created an additional AU$313 million in revenue for its restaurant partners. Deliveroo currently partners with more than 10,000 restaurants across Australia and predicts this number will rise to 17,000 by the end of the year.

Deliveroo benefits
Deliveroo has created an additional AU$313 million in revenue for its restaurant partners. 

What is the future looking like?

The report has projected Deliveroo could support more than somewhere in the region of 31,000 jobs and $696 million of economic output in Australia by 2020. This is based on current trends and growth in Australia. This would mean the Australian economy is receiving a huge boost just of one food tech startup. Deliveroo is showing that, what Uber has done in the transportation sector, they can do in the food sector.

Globally, Deliveroo supported US$5.2 billion in revenue and US$2.3 billion in GDP across its markets. This is leading to 67,000 additional jobs, of which 59,000 are in the restaurant sectors of the markets in which Deliveroo operates.

However, Deliveroo is not the only ones that are globally operative. Having yet to expand to Latin America, the company is seeing a competitor thriving. The company that has already picked up on the gap in the Latin American market is Rappi.

How influential is Rappi’s position in Latin American markets?

Recent studies estimate that more than a billion people across Latin America will be connected to a mobile network by the end of the decade. This is equivalent to about three-quarters of the region’s total population. Consequently, this offers lots of opportunities to startups who offering mobile-first services and offering the right incentives to get people on the street using them.

Explaining Rappi

Rappi is making use of this trend towards a growing consumer tech market. Rappi kicked off its business delivering beverages and has since expanded into meals, groceries and even tech and medicine. You can, for example, have a pair of AirPods delivered to you using Rappi’s app. The company also has a popular cash withdrawal feature. It allows users to pay with credit cards and then receive cash from one of Rappi’s delivery agents. Rappi charges US$1 per delivery. To help keep costs efficient, the company’s fleet of couriers use only motorcycles and bikes.

Rappi impact food markets
Rappi’s impact is leading to annual growth in food markets of at least 3%.

Recently, Rappi, the Colombian on-demand delivery startup, has brought in a new round of funding at a valuation north of US$1 billion. DST Global has led the more than US$200 million financings, with participation from Andreessen Horowitz and Sequoia — all of which were existing investors in the company. These investments are very welcome since Rappi is in a hard-fought battle with iFood over market leading positions in Latin America. After gaining investments that have led to a valuation north of US$1 billion, It is now the second largest food delivery app.

The effect on Latin America

The size of Rappi has a likewise impact on Latin American food markets as Deliveroo has in Australia. This impact is leading to annual growth in food markets of at least 3%. The Latin American food market is proving to be very resilient even though economies fluctuate. The main reason for this resilience is the innovating entrepreneurship from food tech companies like Rappi.

Work together with experts to get started

At Biz Latin Hub, we’ve helped businesses around the world enter new markets and expand their businesses in today’s competitive times. This goes for companies based in Latin America that want to export your goods and services to Australia. However, also for companies based in Australia believe that they can add value to Latin American businesses and industries. You can depend on our time-served and experienced team to deliver across all back-office services.

Covering everything from commercial representation through to visa processing, accounting, taxation, and due diligence, make Biz Latin Hub your partner when trading between Latin America and Australia. Contact the team today to find out more.

The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.

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