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Deliveroo: the failure behind the food delivery giant

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Deliveroo: the failure behind the food delivery giant


Deliveroo has officially quit the Australian market as the food delivery giant announced it had suspended orders made through its app – entering voluntary administration.

The shut down of the company has left 15,000 local riders and restaurants without a job and a scramble to find a new service to deliver food. In an email that was sent to its Aussie customers, the UK-headquartered company said it decided to pull its services out of Australia. 

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

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

The company reflected on its Aussie employees and customers stating, “this has been a difficult decision to make. We have enjoyed serving you the amazing food that Australia is known for, working with thousands of brilliant restaurants and riders.”

The email outlined that whilst customers cannot place orders on the app, the accounts will remain open for the next six months to access and download information. The collapse of the company was as a result of a competitive market. Uber Eats, Menulog and DoorDash overtook Deliveroo and placed the food delivery giant into an unstainable fourth place. The company commented, “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.”

The company launched in Australia in 2015 with its headquarters in Melbourne, Victoria. Michael Korda who has been appointed one of the voluntary administrators of KordaMentha outlined, “Deliveroo was unable to achieve sufficient market share in Australia to develop a sustainable business. To do so would require significant ongoing investment in the Australian market. Given this, Deliveroo Australia’s UK parent has advised that it has decided to cease funding Deliveroo Australia. Without ongoing funding, the director of Deliveroo Australia resolved to place the company into administration.”

Thousands without a job

In a saga that came about in April 2020, a Deliveroo rider for three years was sacked from his job on the basis that he was delivering food orders too slowly. The rider lodged an unfair dismissal claim with the Fair Work Commission. Deliveroo objected to the claim highlighting that the rider was a contractor rather than an employee and was not entitled to unfair dismissal protections under the Fair Work Act 2009. This case brought a change as at first the court was in favour of the rider but with an appeal by the company – and with laws constantly changing, the contract did not state the rider as an employee. 

The Transport Workers Union national secretary Michael Kaine expressed his concern for the delivery workers. “This will be a shock to the thousands of food delivery riders who rely on Deliveroo for income,” he says.

“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.”


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Benay Ozdemir

Benay is an in-house writer for Niche Media.

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