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Deliveroo may be named after an iconic Australian marsupial, but the food delivery giant will no longer be hopping meals across the streets.
The company suddenly announced on Wednesday afternoon that it had entered voluntary receivership and would cease all operations in Australia.
Deliveroo informed customers in an email that they would no longer be able to place orders via the app in Australia.
Customers will still have six months to access their accounts and download their customer orders and information.
Opening the app, where a list of restaurants would normally appear, is simply an error telling customers there’s a problem and to try again later.
Deliveroo suddenly announced it was voluntary and would cease all operations in Australia
Financial documents show that the company went into receivership on Wednesday and that KordaMentha Restructuring has been appointed to take over.
Administrators Craig Shephard, Michael Korda and Andrew Knight will either sell Deliveroo to a new owner or liquidate it and sell it for parts.
How much debt the Australian branch of Deliveroo has and who is at risk of losing the money was not immediately known.
Deliveroo told customers that pulling out of Australia was a “difficult decision” but it was “doing business in a tough economic environment”.
“We always strive to provide the best possible service to our consumers wherever we operate, and if we can’t do that, we will be prepared to review our position,” it said.
‘In Australia, we concluded that achieving a sustainable market leadership position is not possible without a disproportionately high level of investment with highly uncertain returns.’
Deliveroo held just 11.7 percent of Australia’s food delivery market at the end of last year, behind dominant market leader UberEats with 52.9 percent and MenuLog with 19 percent, according to data from IBISWorld
A separate announcement to investors explained that Deliveroo was simply too far behind the market leaders and would cost too much to catch up.
The company has determined that it cannot achieve sustainable and profitable scale in Australia without significant financial investment.
“The expected return on such an investment is disproportionate to Deliveroo’s risk/reward thresholds.
Deliveroo held just 11.7 percent of Australia’s food delivery market at the end of last year, behind dominant market leader UberEats with 52.9 percent and MenuLog with 19 percent, according to data from IBISWorld.
“In Australia, the market is very competitive with four global players, and Deliveroo does not have a broad base of strong local positions,” Deliveroo said.
Opening the app, where a list of restaurants would normally appear, is simply an error telling customers there’s a problem and to try again later
The global company, headquartered in the UK, said its Australian operations accounted for just three percent of its total revenue and were a drag on its profits.
‘[Australia] negatively impacted the company’s adjusted EBITDA margin (as a percentage of gross transaction value) by approximately 30 basis points.
Deliveroo has about 6,500 employees and drivers in Australia and would offer “guaranteed higher employee termination benefits, as well as compensation for passengers and for certain restaurant partners.”
Business was booming for all players in the market during the pandemic, as Australians were trapped indoors during the lockdown and restaurants could only deliver and take away.
Many liked the convenience, and according to Roy Morgan, seven million people continued to use the service after the eatery reopened.
A survey found that 33.4 percent of the country used one in an average month in August, compared to 16.9 percent in early 2020.
The use of delivery companies skewed much younger, and the percentage of Australians using one has actually increased this year after the pandemic.