Deliveroo switches off app, leaving drivers in lurch

The food delivery company, which has gone into administration, has left drivers and restaurants stranded after it shut down its delivery platform today.

Deliveroo drivers have been left stranded and restaurants without a delivery platform after the company’s sudden collapse on Wednesday.

The food delivery company has gone into voluntary administration in Australia, citing poor profitability in a highly competitive market as the reason behind its collapse.

Voluntary administrators KordaMentha have told riders they are no longer needed and have offered limited information on how they will be paid any money owed to them by Deliveroo.

Deliveroo has gone into administration, citing poor profitability in a highly competitive market. Picture: NCA NewsWire / Andrew Henshaw

“The Company ceased trading immediately and accordingly, the Company will no longer be accepting orders or facilitating deliveries in Australia,” KordaMentha said in document issued to stakeholders.

“The Administrators will contact you shortly in relation to the impact of the Administration and provide further details regarding how to submit a Proof of Debt form for amounts owed.”

Another document outlined how riders are considered to be contractors rather than employees, disqualifying them from entitlements and considering them to be “unsecured creditors”.

The company has hired 15,000 drivers and riders as contractors, who have not been promised they will be paid back what they are owed. Picture: NCA NewsWire / Andrew Henshaw

Creditors have been told they must wait for information on how they will be paid money owed to them by Deliveroo, “if any” is paid at all after the collapse.

“The outcome of the Administration will affect how much of your debt will be repaid,” KordaMentha’s document said

“Further information on the likely return to creditors, if any, will be detailed in the Administrators’ report to creditors that will be issued prior to the Second Meeting of Creditors.”

Restaurants were given the same message to wait to be contacted about money they are owed.

There are approximately 15,000 riders and drivers who work for Deliveroo, as well as 12,000 partner restaurants who have had their income stream from the company immediately shut down.

There are also 120 staff who have immediately been let go as a result of the collapse.

Administrators claim they had “no alternative” but to shut down the company immediately due to the “absence of financial support from Deliveroo Australia’s UK parent company, Deliveroo PLC, according to administrator Michael Korda.

An important message from Deliveroo pic.twitter.com/uFaqNB4mRz

— Deliveroo (AU) (@Deliveroo_AU) November 16, 2022

“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,” he said.

“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.”

Mr Korda said KordaMentha’s priority was to “execute an orderly wind-down” of the company “to achieve the best outcome for all stakeholders”.

Around 12,000 restaurants have partnered with Deliveroo Picture: NCA NewsWire / Sarah Marshall

The Transport Workers Union has sought an “urgent meeting” with the administrators, stressing that riders are “devastated over the sudden loss of their jobs”.

“This will be a shock to the thousands of food delivery riders who rely on Deliveroo for income,” TWU national secretary Michael Kaine said.

“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.”

The TWU says the company‘s “sudden and cowardly” departure was callous, and called for change for gig economy workers.

“Transport workers were hit first and hardest by the gig tsunami and are now being left high and dry by Deliveroo at the first indication that it can’t rely on exploitation to make profits,” Mr Kaine said.

“It is clear that urgent regulation is necessary to stabilise this industry and ensure workers are treated fairly, can work safely, and have secure jobs.”

That call has been echoed by Greens Leader Adam Bandt, who said “the gig economy isn’t working for workers”.

“Imagine finding out at 4:50pm that your job no longer exists – and you’re probably not going to get company support after losing your job,” Mr Bandt said on Twitter.

“That’s the reality for thousands of Deliveroo riders tonight.”