Foodora to exit Australia on August 20
FOODORA has announced it is pulling out of the country later this month, raising questions about the viability of popular food delivery apps in Australia.
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FOODORA will cease operating in Australia in less than three weeks after struggling in a saturated market which has looming regulatory changes.
The surprise announcement this afternoon said Foodora will begin winding down its services immediately and will close by August 20.
Foodora country manager Jeroen Willems said the third party delivery business would shift its focus to other markets where the company sees a higher potential for growth.
“We wish to express our gratitude to all of our customers, contractors and employees for their dedication to Foodora Australia, and for allowing us to be a part of their everyday,” he said
“It has been a privilege to bring the food you love right to your door.”
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The company first launched in Sydney as Suppertime in 2008, was taken over by Delivery Hero in 2015 and rebranded into Foodora one year later.
It works with more than 1,000 independent contractor riders, is partnered with more than 2,500 food retailers and has about 300,000 subscribers signed up to its email marketing list.
Industry figures show Foodora’s market share penetration in Australia is 5.3 per cent, which makes it half the size of competitor Deliveroo at 10 per cent, and roughly a quarter the size of market leaders Menulog (18.5 per cent) and Uber Eats (19.5 per cent).
IBISWorld senior industry analyst Andrew Ledovskikh told The Daily Telegraph Foodora’s exit was “not a huge surprise”.
“I would say most likely they still haven’t turned a profit, because Menulog and Deliveroo haven’t,” he said.
“These companies have expanded quite heavily, they are still struggling to make a profit, and there is a very real risk they are going to lose some of the upcoming regulatory battles.”
Foodora riders are on contracts which pay $7 to $10 per delivery, which the company claims results in an average wage of $20 per hour.
Mr Ledovskikh believes the industry is facing increased regulation on workers’ rights as the ‘gig economy’ becomes larger — which should result in higher wages for contractors.
He is unsurprised with Foodora’s exit and believes other food delivery apps are also at threat.
“It’s not surprising at all that one of these operators was going to fail, and if the industrial relations laws change, it wouldn’t be surprising if another one did,” he said.
“The industry is not so rosy anymore … If this was an industry that had a lot of legs and a really bright future, you wouldn’t be having one of the top four players collapsing.”
Deliveroo Australia’s country manager Levi Aron said he is predicting growth in the months and years ahead.
“As competitors move out, our priority continues to be bringing more amazing food to people whenever and wherever they want it,” he said.
“Deliveroo helps restaurants to grow, riders to access flexible, well paid work, and people to experience new and exciting foods. This is our focus for Australia and all markets, where Deliveroo is excited about continued expansion.”