Deliveroo immediately ended its operations in Australia, with 14,000 delivery people and 150 office workers affected.
The UK-based company was founded seven years ago Down Under but has found itself unable to cope with increased market competition from brands such as Uber Eats, Menulog and Doordash. And this despite the fact that Deliveroo was one of the first to settle.
Customers were unable to place food delivery orders via the app on Wednesday, with Deliveroo Australia announcing that it was in voluntary administration.
Riders and drivers who deliver takeout and restaurant orders are considered contractors rather than employees of the company. But they will receive compensation within eight days of liquidation, with another lump sum due after the second creditors’ meeting – Deliveroo said.
Eric French, Chief Operating Officer of Deliveroo, said: “It was a difficult decision that we did not take lightly.
“We would like to thank all of our employees, consumers, passengers and catering and grocery partners who have been involved in Australian operations over the past seven years.
“Our focus now is to ensure that our employees, riders and partners are supported through this process.”
Any driver who has made a delivery in the past three months is entitled to four weeks of compensation, the company said, with compensation calculated based on earnings for the past 12 months.
In the past, the company has come under fire in the UK for failing to provide sufficient protection for its riders, who have been treated as self-employed staff.
Australian Prime Minister Anthony Albanese said during his election campaign earlier this year that he would seek to improve workers’ rights in the gig economy.
UK operations are not affected. Using aggregator statistics based on orders, customers and revenue, Deliveroo is the third most popular food delivery service in Britain, behind Food Hub and market leader Just Eat.
Deliveroo is also expected to cease business operations in the Netherlands by the end of November.