Deliveroo Adds BNPL as Food Delivery Expands

U.K.-based food delivery service Deliveroo is asking the question, “Do consumers want to pay for their burritos in multiple installments?”

The company is now offering buy now, pay later (BNPL) via Klarna, the Mirror reported Tuesday (Oct. 11). Consumers are given the option to pay immediately, to pay the full amount within 30 days or, for orders of at least 30 pounds, to pay in three installments over 60 days.

“Millions of people are already choosing Klarna and we’re giving customers more choice and more flexibility with a safe, secure way to pay online,” Carlo Mocci, chief business officer at the delivery service’s UK and Ireland arm, said in a statement.

There is a significant share of consumers interested in using BNPL options for food purchases. Research from PYMNTS’ report “The New Credit Model: Why Financially Worry-Free Consumers Still Want Alternatives To Traditional Credit,” a PYMNTS and Sezzle collaboration, which draws from a survey of more than 7,000 U.S. adults, found that 65% of consumers who use or would use BNPL options say they are more likely to shop at stores that offer BNPL, and 21% of consumers are interested in using it to pay for groceries.

Read the report: The New Credit Model: Why Financially Worry-Free Consumers Still Want Alter­natives To Traditional Credit

The move has been met with widespread pushback by financial experts including celebrity journalist Martin Lewis, among others.

“People have been paying for food deliveries with credit cards and overdrafts for decades but they’ve been stung by rip-off fees and extortionate interest, so it’s time consumers had the choice of a healthier alternative where they only ever pay the original cost of the purchase,” a Klarna spokesperson commented to multiple news outlets.

Meituan Expanding Internationally

In other overseas food delivery news, China’s Meituan food delivery giant is looking to launch in Hong Kong, to be followed by other international markets, Bloomberg News reported Saturday (Oct. 8), citing unnamed sources familiar with the matter.

Additionally, the South China Morning Post stated that the company already offers Hong Kong residents restaurant and retailer recommendations, suggesting some familiarity with the dining landscape therein. An inside source told the outlet that the company has begun recruiting staff within the city in preparation to launch the delivery service.

International food delivery services have a mixed track record when it comes to expanding to Hong Kong. Foodpanda, founded in Singapore and now owned by Germany-based Delivery Hero, has been operating in Hong Kong since 2014, and Deliveroo has also been in Hong Kong for years. Meanwhile, Uber Eats pulled out of Hong Kong last November.

Restaurant Prices Still Rising

Data from the U.S. Bureau of Labor Statistics released Thursday (Oct. 13) showed that food prices continued to rise in September, but that the year over year growth rate actually decreased a little from 11.4% in August to 11.2%. Similarly, grocery prices’ year over year growth decreased from 13.5% to 13.0%.

Yet restaurants, which have been doing all in their power to absorb inflation, keeping their price increases lower than those of their grocery counterparts, are seeing the year-over-year price growth continue to rise, up from 8% in August to 8.5% in September. Similarly, while grocery prices rose 0.7% month over month, restaurant prices rose 0.9%.

It would appear that, having absorbed these price increases for so long, restaurants’ defenses against inflation are wearing down, even as they continue to try to mitigate consumer trade down.

PYMNTS’ study “Consumer Inflation Sentiment: Inflation Slowly Ebbs, but Consumer Outlook Remains Gloomy,” which drew from an August survey of 2,169 consumers, found that 78% say they are eating at home more often to save money. Plus, 38% are going to restaurants with lower prices.

Learn more: New Survey Shows Consumers Less Optimistic Than Fed on Taming Inflation