Deliveroo PLC (LSE:ROO) has decided to end operations in Australia.
In a statement, the food delivery service said it does not have strong local positions in Australia due to a highly competitive market and that its decision to stop trading was driven by its “disciplined approach to capital allocation”.
Sales in the country represented roughly 3% of total gross transaction value (GTV), while it negatively impacted the company’s adjusted underlying earnings (EBITDA) margin by 0.3%.
As a result, Deliveroo believes it cannot reach sustainable profit without considerable investment, and any return on that investment is “not commensurate with Deliveroo’s risk/reward threshold”.
Deliveroo’s Australian subsidiary has been placed into voluntary administration, it said, and will cease trading imminently.
A deed of company arrangements will be put forward to the administrators by Deliveroo Australia outlining compensation packages, included guaranteed severance payments for employees.
Despite ending operations in Australia, Deliveroo said there is no change to its previous guidance on GTV and adjusted EBITDA margin for 2022 and beyond.
“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,” said chief executive Eric French.
“Our focus is now on making sure our employees, riders and partners are supported throughout this process."