Deliveroo PLC (LSE:ROO) said it is proposing to exit the Spanish market because reaching a top-tier market position “would require a disproportionate level of investment”.
The delivery group said the long-term potential returns are “highly uncertain” making Spain an unviable market economically.
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But the company did not explicitly reference the Spanish government's recent passing of a new law that forces delivery companies to class their drivers and riders and employees, following a ruling by the country's Supreme Court last year.
The “rider law” means digital food delivery app operators such as Deliveroo need to inform riders about how the technology affects their working conditions.
Playing down the potential Spanish exit, Deliveroo said the southern European country currently represents less than 2% of gross transaction value.
The tech unicorn will start consultations with affected employees and riders, who would receive the appropriate compensation and severance packages, in early September.
Shares rose 1% to 329.5p on Friday morning.