Landlords have started adding ‘Deliveroo clauses’ to turnover rent contracts for London restaurants, in response to the app’s growing popularity in the capital.
The clauses mean money made from meals sold through the app must be declared by operators signing up to turnover rents, a type of contract that has become increasingly prevalent in the leisure sector in recent years.
Unlike other available takeaway apps such as Just Eat and hungryhouse, Deliveroo targets higher-end restaurants that do not already have their own courier service.
One London leisure agent confirmed that the clauses were being introduced to deals as landlords sought to benefit from the London start-up’s success.
“It’s not something you would add to every lease; it’s quite a niche thing,” he said. “But it makes sense because the turnover made from it can be huge. Some restaurants are now making up to 90% of their sales through Deliveroo.”
The development mirrors ongoing negotiations in the retail sector, where the growth of online sales has been calling the established turnover rent model into question for years.
Agent Harper Dennis Hobbs’ head of retail consultancy Jonathan De Mello said the position on how online profits should be factored into retailers’ turnover was still a “moving picture”.
“Landlords are definitely concerned about it and want to understand the relationship between shops and online profits better,” he said. “For example, click & collect purchases picked up in shops currently do not count as in-store purchases.
“With the online side growing all the time, obviously landlords want to capitalise on that, but then why would retailers want to link online sales to their shops if landlords are going to use it to take more rent from them?”
Deliveroo revealed that it picked up $275m (£200m) in its latest funding round at the start of this month, making the three-year-old company one of Europe’s best-funded start-ups.
Meanwhile, taxi app Uber launched its rival food delivery service UberEats in London in July and is preparing to launch in other UK cities.