German-founded food delivery startup Foodora has announced it will close all Australian operations by August 20, reducing the number of local food delivery platforms to just a handful.
In a statement, the company said the move is due to a shift in focus towards other markets where it 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. It has been a privilege to bring the food you love right to your door,” Foodora Australia country manager Jeroen Willems said in a statement.
Amongst its numerous head office and operations staff, Foodora has hundreds of delivery drivers operating in Australia. It says it will “fully utilise its resources” to help its employees and riders find alternative roles before it shuts up shop.
Foodora was founded in 2014 in Germany, and has gone through numerous acquisitions and rebrands; it was acquired by Rocket Internet in April 2015 and then by Delivery Hero in September 2015.
The company was one of the few online food delivery services operating in the Australian market, and one of only three that offered a “gig economy” model where restaurants and cafes didn’t have to source their own delivery drivers.
According to IBISWorld, these companies make up part of a $20 billion fast food and takeaway industry in Australia, which analysts say it’s starting to suffer, thanks in part to the delivery operators.
“Overall, the fast food and takeaway food Services industry has struggled to maintain profitability levels over the past five years, which is bad news for an industry where many of its players are already running on thin margins. Industry revenue growth is expected to be an annualised 0.7 % over the next five years,” said IBISWorld senior industry analyst Andrew Ledovskikh.
With issues around regulation, unsustainable fees for small businesses, and cannibalisation, the Australian food delivery market has been a rocky one. Here’s a brief plotted history of all the new entrants and the issues they’ve had to face Down Under.
1985 – Suppertime launches
Suppertime was one of Australia’s first food delivery companies, operating almost exclusively in Sydney’s eastern suburbs and providing a delivery services to mostly higher-end restaurants.
“Suppertime always stayed in the background and simply delivered good food on behalf of good restaurants,” the company said on its (now defunct) website.
2006 — Menulog founded
Australian and New Zealand-based food delivery company Menulog was founded in 2006, and initially based and headquartered in Sydney. The service, which facilitates orders but does not supply drivers, has delivered over 22 million meals since its inception.
2007 — EatNow founded
Started by four Australian guys in a London flat, EatNow was a similar player to Menulog. Melbourne-based, the food delivery company offered businesses a way to take online orders, as well as an online portal to display and promote their food.
2011 — DeliveryHero launches Australian offering
Similar to Foodora, DeliveryHero is a German company founded in 2011. It immediately launched in Australia with a similar offering to EatNow and Menulog.
Get SmartCompany FREE to your inbox every weekday.
The company went public last year, and now has a market capitalisation of $US8.8 billion ($11.96 billion).
2011 — OrderUp! Launches
Another local player in the food delivery scene launches. OrderUp! operates more of an out-of-the-box solution for brands to organise their own delivery services, rather than providing services itself.
2014 — Deliveroo comes Down Under
The first of Australia’s ‘gig economy’ food deliverers, the American-founded company rolled out its bright blue delivery bike riders in Australia three years ago after a $140 million capital raise.
February 2015 — EatNow, Menulog merge
The two biggest food delivery services in Australia join forces. Today, the two brands still operate separate websites.
June 2015 — Foodora acquires Suppertime
The German food delivery company buys Suppertime in Australia, and despite the company continuing to run independently for some time, it eventually adopted the Foodora brand.
September 2015 — Delivery Hero acquires Foodora
It was a big year for food delivery acquisitions. At this point, Australia’s food delivery market had two main players: Delivery Hero and Foodora versus Menulog and EatNow. Oh, and Deliveroo.
April 2016 — UberEATS launches in Australia
Needing no introduction, Uber’s food delivery offering launched in Melbourne just over two years ago, though it feels like much longer. Not long after, the service expanded into Sydney and other capital cities.
December 2016 — Delivery Hero leaves Australia
The big boss is out, leaving the Foodora brand to maintain the company’s presence in Australia.
June 2017 — Fair Work Ombudsman investigates Uber
In the culmination of constant brewing discontent over the issues surrounding the gig economy, the Fair Work Ombudsman in confirmed it would investigate Uber (and UberEATS) to ensure its practices were compliant with workplace law.
This case, results of which are still to be revealed, will likely be a watershed moment for Australian gig economy companies such as UberEATS and Deliveroo.
October 2017 — Businesses get fed up with UberEATS
Numerous Australian small businesses say they’ve had it with UberEATS and similar operators, haranguing the delivery operator for its high fees and poor service.
“We feel UberEATS is incredibly exploitative of small business AND drivers,” said one business who left the service.
June 2018 — Foodora faces legal action
The company faces legal action from the Fair Work Ombudsman over sham contracting allegations, which experts labelled as “unquestionably significant”.
This week — Foodora leaves Australia
And we’re back to now. At the end of this month, Australia will have four main food delivery operators: Menulog, EatNow (owned by the same company), UberEATS, and Deliveroo.