Deliveroo fails to deliver, pulls out of Australia after sliding into administration

16 Nov 2022

Sydney Morning Herald

Deliveroo fails to deliver pulls out of Australia after sliding into administration

The food delivery service is winding up its local operations, offering compensation pay to 14,000 drivers after struggling to compete against rivals such as Uber Eats and Menulog in a challenging economy.

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Deliveroo Australia will offer 14,000 drivers compensation pay after announcing it has entered voluntary administration and is no longer taking orders.

In an email sent to Australian customers on Wednesday afternoon, the UK-headquartered company said it had decided to pull out of Australia.

“Deliveroo Australia has ceased operations, meaning you can no longer place orders on Deliveroo in Australia,” the email said.

“Deliveroo, like all other companies, is now doing business in challenging economic conditions, which requires us to take difficult decisions.”

A spokesperson for Deliveroo Australia said any driver who had completed a delivery in the past three months was eligible for four weeks of compensation pay. The compensation will be calculated according to the driver’s average weekly earnings across the past 12 months.

Deliveroo admitted it had been unable to compete with other players in the Australian food delivery market, such as Uber Eats, Menulog and Doordash, and the company’s total global earnings had taken a hit from keeping the Australian business operating.

The company said in a media statement it had decided it would not be able to achieve the “sustainable and profitable scale in Australia without considerable financial investment”, and the returns would not outweigh the investment.

The business will permanently cease trading and has appointed KordaMentha’s Michael Korda, Andrew Knight and Craig Shepard as voluntary administrators.

“This was a difficult decision and not one we have taken lightly,” said Deliveroo chief operating officer Eric French, who thanked employees, customers, riders and restaurant partners.

“Our focus is now on making sure our employees, riders and partners are supported throughout this process.”

On top of its network of 14,000 drivers, Deliveroo Australia has 150 Australian head office employees.

“Certain restaurant partners” may also be eligible for compensation payments as the company works on putting together compensation packages to creditors,” the company said.

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Jessica Yun is a business reporter for The Sydney Morning Herald and The Age covering the food, beverage and agribusiness sectors.Connect via Twitter or email.