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Deliveroo exits Australia market to cut costs

Deliveroo Australia

British food delivery app Deliveroo has exited the Australian market, citing “challenging economic conditions” and the “considerable” investment required to make the subsidiary profitable.

Deliveroo suspended all orders in Australia today and entered voluntary administration. Advisory and investment firm KordaMentha will oversee the process.

In a statement, Deliveroo said: “This has been a difficult decision to make… Deliveroo, like all other companies, is now doing business in challenging economic conditions, which requires us to take difficult decisions.”

Those attempting to order through the Deliveroo app in Australia on Wednesday were met with error messages, leading to a flurry of frustrated comments on social media.

ROO seeks profit

Deliveroo’s exit from the Australian market is the latest attempt by the London-listed firm to cut costs. Deliveroo has previously prioritised growth over profits since its IPO in 2021, but recently shifted its focus to seeking profits. Its shares, trading under the ticker ROO, have lost 66% of their value since its public market debut.

Deliveroo said its Australia business represented approximately 3% of the company’s total gross transaction value.

“Achieving a sustainable position of leadership in the [Australian] market is not possible without a disproportionate level of investment which would have highly uncertain returns,” the company said in an investor statement.

Withdrawal from the Australian market comes after the firm exited the Dutch market in August, a market that represented 1% of its gross transaction value.

Anthony Miller, co-founder of UK tech analyst firm TechMarketView, said that if Deliveroo CEO Will Shu wants to achieve the “impossible dream” of profitability, he would have to take “far more drastic action”, including “exiting non-UK operations entirely”.

In September, Deliveroo faced a court challenge from the Independent Workers’ Union of Great Britain (IWGB) over the treatment of its couriers. Deliveroo had faced similar pressure over its couriers in Australia.