Deliveroo exits Australian market, announcing massive layoffs

Deliveroo has been placed into voluntary administration, 120 staff and 15,000 riders have been subsequently laid off, with an estimated 12,000 restaurants left without a primary delivery platform.

Deliveroo – listed on the London Stock Exchange – launched in Australia in 2015 with headquarters in Melbourne, and had recently expanded into grocery delivery with partners BP and EzyMart. The British platform, backed by Amazon, has made public that the decision was driven by a ‘disciplined approach to capital allocation’. As explained by denied that federal government reforms to the gig economy played a role.

Deliveroo said that four global players had made the local market highly competitive and they did not hold a broad base of strong local positions.

According to Financial Review, Deliveroo was not part of the deals made in 2022 by Uber and DoorDash with the Transport Workers Union and had faced years of being entangled in courts, including a decision by the workplace tribunal in August 2022, which overturned a ruling that a Deliveroo rider was an employee.

The TWU said it had sought urgent consultation with administrators on what entitlements might be clawed back for “riders who stand to lose their jobs in the blink of an eye”, as they claimed it added to the case for reform. The TWU referenced the departure of Foodora in 2018, when administrators found workers had been misclassified and were employees, with the parent company Delivery Hero later paying USD 3 million in backpay.

The food delivery ecosystem in Australia

US delivery platform DoorDash has been the latest to join the food delivery race in Australia, which also includes Uber Eats and Menulog. 

The market size of the online food ordering and delivery platforms industry in Australia in 2022, measured by revenue, amounts to USD 850.5 million and it is expected to increase 1.7% in 2022. The online food ordering and delivery platforms industry in Australia has grown 20.6% per year on average between 2017 and 2022.

Deliveroo said that in the first half of 2022, the Australian business represented just 3% of their gross transaction value and negatively impacted the company’s adjusted EBITDA margin by 30 basis points.