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Deliveroo abruptly exits Australian market

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By Published On: November 18, 20220 Comments

Food delivery service Deliveroo has been placed into voluntary administration, abruptly ceasing trading.

The UK based company has operated in Australia since 2015. Deliveroo was one of the first meal-delivery services to launch in Australia, arriving a year before Uber Eats.  At times, Deliveroo was the second most popular meal-delivery service in the country. Deliveroo said the market was highly competitive and that it did not hold a broad base of strong local positions. The company announced it would permanently cease trading imminently.

The official statement posted by the company read, “In Australia, we have concluded that achieving a sustainable position of leadership in the market is not possible without a disproportionate level of investment which would have highly uncertain returns.”

“This was a difficult decision and not one we have taken lightly,” chief operating officer Eric French said in a statement. “Our focus is now on making sure our employees, riders and partners are supported throughout this process.”

This will impact 120 staff based in Australia as well as up to 15,000 delivery partners and more than 12,000 restaurants.

The transport union is seeking an urgent meeting with Deliveroo administrator in a bid to secure assistance for delivery workers. “This will be a shock to the thousands of food delivery riders who rely on Deliveroo for income,” TWU national secretary Michael Kaine said. “The TWU has sought urgent consultation with administrators on what entitlements might be clawed back for food delivery riders who stand to lose their jobs in the blink of an eye.”

Deliveroo has increased revenue by 50% or more for the past three years, yet the company has been hit with dwindling demand. In a July trading update statement, the company announced it had revised its gross transaction value (GTV) forecast for 2022 from between 15% and 25%.to between 4% and 12% in constant currency, a significant decrease. In the first half of the year the Australian business had represented approximately 3% of Deliveroo’s total gross transaction value (GTV), it said. Last month, the company warned that sales growth would be at the lower end of its previous guidance, because rising prices were deterring people from ordering takeaways. The actual numbers are yet to be released as we wrap up the year, whether or not these numbers will ever come to light is to be determined.

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About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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