Business and delivery riders have been left scrambling to find a replacement for Deliveroo after the company’s sudden departure from Australia overnight.
Experts warn Deliveroo’s closure could be the first of several meal-delivery services to disappear due to challenging economic conditions, while prices for deliveries may rise to make the industry more sustainable.
Deliveroo shocked employees, contractors, partners and customers on Wednesday when it announced it would go into administration and stop operating in Australia immediately.
The company’s website was wiped overnight and its app no longer functions.
Riders said they were given no notice of the plans to shut the company.
“I was working in the morning, stopping at midday and then suddenly when I wanted to start working again, this notification pops up on the screen of the app,” Rodrigo, a Deliveroo rider said. “And I went to the emails [to] check [and they said] that they cease immediately, effective immediately . So I couldn’t even finish the day yesterday.”
Based in Sydney, Rodrigo worked about 30 hours a week for Deliveroo while he studied in Australia and sent money home to Argentina to support his daughters.
He said he would try to get more work with other apps, but that Deliveroo offered higher rates of pay, so he would now be looking for other jobs.
Other services have begun to encourage former Deliveroo riders to sign up. The general manager of DoorDash Australia, Rebecca Burrows, said the company has a “streamlined onboarding process” to get riders up and running as soon as possible.
“Our team is also working to contact restaurants and retailers who have lost business overnight,” she said.
Guardian Australia also sought comment from Uber.
The owner of the Canberra burger chain Grease Monkey, Nick Tuckwell, said he discovered Deliveroo’s closure on a social media post – even though the company had been the restaurant’s exclusive delivery partner for years.
“We had 30% of our business go away yesterday,” he said. “We’re out north of $30,000. That would have been three days’ trade and also a marketing fund.
“The real killer is the lack of notice. If we were told we had 30 days to sort it out, we could have moved and adapted, but to not be told anything and be left in the dark was extremely frustrating.”
Tuckwell said the news was particularly shocking as it came just hours after a two-hour meeting with Deliveroo’s marketing team.
Other companies that previously had arrangements with Deliveroo appear to have moved to other services in advance of the closure. Both Guzman y Gomez and Mary’s both started offering deliveries through DoorDash in the past few months after previously using Deliveroo.
The chief executive of the Australian Foodservice Advocacy Body, Tony Green, said restaurants and cafes using Deliveroo exclusively would be hit hard by its closure, and the industry needed to pay close attention to how much money administrators repaid to those businesses.
But Green said Deliveroo may not be the last food-delivery service to close as consumers were tightening their belts and the market was no longer growing as fast as it had during Covid-19 lockdowns.
“This is a bit of a canary in the coalmine, to some degree. I think there’ll be more of this happening,” he said.
Deliveroo’s Australian closure, which came after the business shut operations in Germany, Taiwan, Spain and the Netherlands, has affected up to 15,000 delivery workers who the company classified as contractors.
The company confirmed the workers would be eligible for four weeks’ compensation, based on their annual earnings.
But Dr Rob Nicholls, a UNSW Sydney associate professor said it was delivery workers who may suffer the most from the company’s closure.
“No restaurant is going to say ‘well, if Deliveroo is out of the game, we’ll stop using a delivery service’,” he said. “They’ll shift to one of the other big three services almost certainly.”
Rodrigo, a Transport Workers’ Union member, said he hoped the federal government would improve gig workers’ rights.
“We’ve been fighting so hard against these kinds of companies … They are exploiting us and they are not treating us like workers. So we don’t have rights. We don’t have any benefits … nothing at all. We are not even considered workers for them.”
Nicholls said Deliveroo’s shutdown should encourage governments to regulate food-delivery services and change what he called “precarious contracting”.
The TWU said on Wednesday it was urgently seeking a meeting with Deliveroo’s administrators about the impact of the closure. The union said Deliveroo had been the “outlier” in the industry and had opposed worker standards reforms supported by Uber and DoorDash.
“Deliveroo’s sudden and cowardly act, treating workers as callously in exit as it did in operation, highlights the urgent need for the federal government to enact gig reform,” the union’s national secretary, Michael Kaine, said on Wednesday.
“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.”
The Labor government has promised to introduce legislation to allow the Fair Work Commission to set rates and conditions for gig economy workers, but the legislation will reportedly not be introduced until next year.
The Greens social services spokesperson, Janet Rice, said the closure would leave many workers without an income, many of whom are ineligible for Jobseeker – showing the need for a guaranteed livable income.
Deliveroo is the second food delivery service to exit Australia after Foodora in 2018.
Australian Associated Press contributed to this report.
• This article was amended on 18 November 2022 to remove a claim that Deliveroo did not provide insurance for its workers.
