Deliveroo is pulling out of the Australian market.

The London-listed food delivery disrupter said its operations in the country “cannot reach a sustainable and profitable scale without considerable financial investment”.

Its subsidiary in Australia, Deliveroo Australia Pty Limited (DAPL), has been placed into voluntary administration and will cease trading imminently. 

Michael Korda, Andrew Knight and Craig Shepard of KordaMentha have been appointed as voluntary administrators of DAPL.

“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,” said the company.

“In Australia, the market is highly competitive with four global players, and Deliveroo does not hold a broad base of strong local positions.

“The expected return on such investment is not commensurate with Deliveroo’s risk/reward thresholds.”

OBI boss: Scaling tech firms now need sophisticated workspaces

In H1 2022, the Australian business represented approximately 3% of Deliveroo’s total gross transaction value and negatively impacted the company’s adjusted EBITDA margin.

As part of the administration process, Deliveroo Australia will put forward a Deed of Company Arrangement to the administrators 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, it said.

“This was a difficult decision and not one we have taken lightly,” said COO Eric French. “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.”

In Crypto: Meghan and Harry to launch ‘Meg-averse’