Deliveroo Australia collapses, enters administration

Deliveroo Australia collapses
The delivery company has shut down its app in Australia. Image Bigstock.

Delivery service provider Deliveroo has ceased trading in Australia, entering voluntary administration after about seven years of operation in the country. 

The British-headquartered multinational announced the closure to customers and online on Wednesday evening and said the decision was effective immediately, with the app disconnected.  

The company said the decision was driven by Deliveroo’s “disciplined approach to capital allocation”. Having failed to reach a sustainable and profitable scale in Australia without considerable financial investment it opted to close the business. 

“The expected return on such investment is not commensurate with Deliveroo’s risk/reward thresholds,” the company said. 

Deliveroo started its business in Australia in 2015 and was the longest-standing online food delivery platform in the country. During the past few years, the market has experienced fierce competition from global major players, including DoorDash, Menulog and Uber Eats.

Deliveroo Australia’s administration “a difficult decision”

During the first half of this year, the Australian unit only accounted for 3 per cent of Deliveroo’s global gross transaction value and negatively impacted the company’s adjusted EBITDA margin by approximately 30 basis points.

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

Michael Korda, Andrew Knight and Craig Shepard of KordaMentha have been appointed as voluntary administrators of Deliveroo Australia. 

Deliveroo said it will set out the appropriate compensation packages it intends to provide for its creditors. This includes guaranteed enhanced severance payments for employees as well as compensation for riders and certain restaurant partners.

The British company’s operation in Australia has not been without controversy. In May last year, Inside Retail reported how an unfair dismissal ruling against Deliveroo is a big deal for Australia’s gig workers.

This article was first published on sibling website Inside Retail.