Deliveroo ends food deliveries in Australia

Deliveroo announced Wednesday an end to operations in Australia after seven years in the country, citing strong competition.

It comes three months after an exit from the Netherlands and following its departure from Spain last year. Deliveroo has 14,000 self-employed riders in Australia.

Deliveroo enjoyed strong sales growth during pandemic lockdowns, helping to offset big investment costs that have added to questions over its sustainability.

Households are also battling with soaring inflation that has cut consumer spending.

“Deliveroo is today announcing that it has decided to end its operations in Australia,” a statement said. “This decision is driven by the company’s disciplined approach to capital allocation.”

It said the Australian market “is highly competitive with four global players, and Deliveroo does not hold a broad base of strong local positions”.

Victoria Scholar, head of investment at Interactive Investor, said “there are concerns that Deliveroo is not well positioned to weather the economic downturn with takeaways a discretionary spend that consumers can easily slash as belts tighten”.

Deliveroo has meanwhile failed to recover from a terrible stock market debut last year in London.

Its initial public offering was the capital’s biggest stock market launch for a decade, valuing the group at £7.6 billion.

But its share price tumbled on launch day by almost a third from the IPO price of 390 pence as investors questioned Deliveroo’s treatment of its self-employed riders.

Following Wednesday’s announcement, its shares were trading down 3.5 percent at 96 pence.

Deliveroo’s exit from Spain last year came after the country legally recognised delivery riders as staff, meaning they must be provided with social benefits such as paid holidays and sick leave.

The group was founded in 2013 by current chief executive Will Shu.