Should Deliveroo prioritize expanding restaurant selection or improving existing partner relationships?

Introduction

The trade-off between expanding restaurant selection and improving existing partner relationships is a critical decision for Deliveroo's growth strategy. This scenario involves balancing the breadth of our offering against the depth of our partnerships. I'll analyze this trade-off by examining its impact on our ecosystem, proposing metrics to measure success, and designing experiments to validate our approach.

Step 1

Clarifying Questions (3 minutes)

• Based on our current market position, I'm thinking restaurant selection might be a key differentiator. Could you share our current market share and how it compares to our main competitors?

Why it matters: Helps determine if breadth or depth is more critical for competitive advantage Expected answer: We're second in the market with 30% share, trailing the leader at 40% Impact on approach: If we're far behind, might lean towards expansion; if close, might focus on deepening relationships

• Considering our revenue model, I assume we take a percentage of each order. Is our take rate consistent across all restaurant partners, or do we have tiered structures?

Why it matters: Influences the potential financial impact of focusing on existing partners Expected answer: We have a tiered structure with lower rates for high-volume partners Impact on approach: If significant rate differences exist, improving existing relationships could be more lucrative

• Looking at user behavior, I'm curious about order patterns. What percentage of our users order from new restaurants vs. returning to favorites?

Why it matters: Indicates user appetite for variety vs. loyalty Expected answer: 70% of orders are from repeat restaurants for a user Impact on approach: High repeat rate might suggest focusing on existing partners; low rate could favor expansion

• Regarding our tech infrastructure, how scalable is our onboarding process for new restaurants?

Why it matters: Determines feasibility of rapid expansion Expected answer: Current process is semi-automated but requires some manual steps Impact on approach: If highly scalable, expansion becomes more attractive; if not, might need to prioritize improving existing relationships first

• Considering our current team structure, do we have dedicated account managers for our restaurant partners?

Why it matters: Affects our ability to deepen relationships without significant hiring Expected answer: We have account managers for top-tier partners only Impact on approach: Limited account management might make rapid expansion challenging, favoring focus on existing partners