Documents show weeks of planning ahead of Deliveroo Australia shutdown
Documents lodged with the corporate regulator reveal how Deliveroo planned in secret to shut down its Australian operations.
Deliveroo sent senior executives to meet with administrators to determine the viability of its Australian operations two weeks before the local boss was told to pull the plug on the loss-making business.
A document submitted to the Australian Securities and Investments Commission shows KordaMentha was first contacted by Deliveroo representatives on October 30 – 17 days before the company was tipped into voluntary administration.
The documents shows KordaMentha had multiple rounds of communications with representatives of Deliveroo’s general counsel, the director of corporate communications and the vice president finance, as well as the delivery platforms’ lawyers Gilbert + Tobin between October 30 and November 16.
But Deliveroo Australia boss Ed McManus only first met KordaMentha to discuss the demise of the company on November 10, six days before the app was switched off without prior notice to workers or customers. Mr McManus again met KordaMentha on November 15 and November 16, the day Deliveroo Australia was shut down.
The note from KordaMentha said the administrators met Mr McManus to obtain “sufficient information about the company to advise the company and director on the solvency of the company” and “clarify and explain for the company and director the various options available to the company and the nature and consequences of an insolvency appointment.”
KordaMentha said there were also a number of interactions with Deliveroo Australia’s executives and legal advisers “by way of email or phone” prior to their appointment. Mr McManus, Late on November 16, addressed almost 150 Deliveroo staff in Australia to tell them the company would be closing its doors and most of them would be made redundant.
Deliveroo pulled the plug on its Australian operations claiming they were not profitable and would be unlikely to turn cash positive without significant investment by the parent company.
Mr McManus will remain in his job, to assist KordaMentha partners Craig Shepard, Andrew Knight and Michael Korda with the wind down of the business ahead of a plan to be presented to riders, restaurants, and staff in December. A skeleton staff has been retained to shut down operations.
“Without ongoing funding, the director of Deliveroo Australia resolved to place the company into administration,” Mr Korda said.
The closure comes amid hot competition in Australia’s food delivery market, with Deliveroo noting Australian business represented only 3 per cent of the company’s total gross transaction value and negatively impacted the company’s adjusted earnings by “approximately 30 basis points”.
In a recent trading update Deliveroo said it was pushing for profitability, flagging plans to break-even in the middle of the 2023 financial year or in the first half of 2024.
Grocery delivery app SEND fell into voluntary administration less than 12 months after launching, closing in May after burning through $11m in investor cash in just eight months.
Deliveroo has promised to pay riders and drivers who completed deliveries, capped at four weeks pay calculated against an average of weekly earnings.
The company has also promised compensation for “certain restaurant partners” as part of the deed of company arrangement planned to wipe the slate clean.
Menulog has moved to pick up riders, restaurants, and customers from Deliveroo announcing on Friday it would honour unused account credits, vouchers, and gift cards. The delivery platform said it would set up an expedited system to allow ex-Deliveroo couriers to sign on with the platform.
Menulog managing director Morten Belling said the company wanted to help couriers and “get up and running on the Menulog network as a priority and provide any safety gear that is required”.
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