Deliveroo announces decision to end operations in Australia
Read the full statement here.
Deliveroo has announced its decision to end operations in Australia. Find the full statement below:
Deliveroo is today announcing that it has decided to end its operations in Australia. This decision is driven by the Company's disciplined approach to capital allocation. Management is committed to driving growth and delivering on its path to profitability while aiming to have strong, profitable businesses in each of the markets in which it operates, built on the foundation of leading hyperlocal market positions.
In Australia, the market is highly competitive with four global players, and Deliveroo does not hold a broad base of strong local positions. In H1 2022, the Australian business represented approximately 3% of Deliveroo's total Gross Transaction Value (GTV) and negatively impacted the Company’s adjusted EBITDA margin (as % of GTV) by approximately 30 basis points.
Working with the local Australian leadership, the Company has determined that it cannot reach a sustainable and profitable scale in Australia without considerable financial investment, and the expected return on such investment is not commensurate with Deliveroo’s risk/reward thresholds.
Given this position, Deliveroo has decided to end its operations in Australia. The Company's subsidiary in Australia, Deliveroo Australia Pty Limited (DAPL), has therefore been placed into voluntary administration by its Director and will permanently cease trading imminently. Michael Korda, Andrew Knight and Craig Shepard of KordaMentha have been appointed as voluntary administrators of DAPL.
As part of the administration process, Deliveroo Australia will put forward a Deed of Company Arrangement to the administrators in due course setting 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 for certain restaurant partners.
As reported in the Q3 2022 trading update on 21 October, throughout 2022 Deliveroo has been adapting financially to the operating environment and driving forward on the path to profitability. Following today’s announcement, there is no change to Deliveroo’s previously-communicated financial guidance on GTV growth and adjusted EBITDA margin for 2022 and beyond.
Eric French, Chief Operating Officer, said: “This was a difficult decision and not one we have taken lightly. We want to thank all our employees, consumers, riders and restaurant and grocery partners who have been involved with the Australian operations over the past seven years. Our focus is now on making sure our employees, riders and partners are supported throughout this process.”
