Restaurant and café owners have urged Australians to boycott delivery platforms like UberEats as many switch to an in-house delivery service after Deliveroo’s demise.
Owners slammed delivery applications over constant service issues and for not providing support to businesses.
Deliveroo abruptly shut its doors on Wednesday leaving thousands of workers without a job, and further entrenching UberEats’ market dominance.
The company claimed poor profits and an increasingly competitive market against Uber Eats, Menulog, DoorDash and Takeaway.com was behind the sudden closure.
Australian business owners have urged customers to stop using third-party delivery apps like Uber Eats and Menulog as many don’t provide ‘any real support’ to outlets (stock image)
Chris Lucas, who owns Melbourne hospitality group Lucas Restaurants, said he was done with third-party apps due to ongoing service issues.
‘We’ve never really been satisfied with the level of service that we receive,’ he told the Today show.
‘We’ve always had lots of issues, non-delivery of food, you know, drivers not picking up on time and it was a very problematic service and at the end of the day, certainly wasn’t profitable for us and we always found it very difficult working with these multinational companies.’
The restaurateur said third party delivery services were ‘not Australian’ owned and he didn’t feel they had ‘any real brand ownership’.
Mr Lucas now only uses an in-house delivery service for his restaurants and takeaway stores and felt using third-party delivery companies ‘wasn’t worth the headache’.
‘For us it was a logical decision to just cut all ties with all the delivery apps since really we had so many complaints from all our customers over the last few years,’ he said.
The business owner added that the same companies, in his view, ‘really exploited the situation’ during Covid lockdowns and didn’t provide ‘any real support’ when there were glaring problems with drivers, deliveries, or transactions with customers.
‘I never really left that period thinking to myself that we had true partners there that would support us in good times and in bad,’ he said.
His restaurants and takeaway outlets, which include Baby Pizza and Hawker Hall, have been wiped off all delivery apps.
Chin Chin, which serves Southeast Asian cuisine and has restaurants in both Sydney and Melbourne, was taken off the apps last year.
Melbourne restauranteur Chris Lucas (pictured), who owns Lucas Restaurants, slammed third-party delivery companies and said he was finished with them due to constant service problems
Mr Lucas described third-party apps as a ‘very problematic service’ and said he would now only use an in-house delivery service for his restaurants and takeaway outlets (stock image)
Deliveroo announced on Wednesday that it had shut down all operations in Australia and entered voluntary administration.
The decision affects 14,000 restaurants, 14,000 riders and 150 staff.
Financial documents show the firm was put into administration with KordaMentha Restructuring appointed to take over.
Administrators Craig Shephard, Michael Korda, and Andrew Knight will either sell Deliveroo to a new owner, or liquidate it and sell it for parts.
How much debt Deliveroo’s Australian arm is in, and who stood to lose money they were owned, was not immediately known.
Opening the app, where a list of restaurants would usually appear, is just an error telling customers ‘there’s a problem’ and to try again later
Deliveroo told customers pulling out of Australia was a ‘difficult decision’ but it was ‘doing business in challenging economic conditions’.
‘We always aim to deliver the best possible service for our consumers wherever we operate, and if we cannot do that we will be prepared to review our position,’ it said.
‘In Australia, we have concluded that achieving a sustainable position of leadership in the market is not possible without a disproportionate level of investment which would have highly uncertain returns.’
A separate announcement to investors explained that Deliveroo was simply too far behind that market leaders and it would cost too much to catch up.
‘The company has determined that it cannot reach a sustainable and profitable scale in Australia without considerable financial investment,’ it said.
‘The expected return on such investment is not commensurate with Deliveroo’s risk/reward thresholds.
Deliveroo at the end of last year had just 11.7 per cent of the Australian food delivery market, behind dominant market leader UberEats on 52.9 per cent and MenuLog with 19 per cent, according to IBISWorld data.
Deliveroo at the end of last year had just 11.7 per cent of the Australian food delivery market, behind dominant market leader UberEats on 52.9 per cent and MenuLog with 19 per cent, according to IBISWorld data
‘In Australia, the market is highly competitive with four global players, and Deliveroo does not hold a broad base of strong local positions,’ Deliveroo said.
The global company, headquartered in the UK, said its Australian business was just three per cent of its total revenue and was a drag on its profit.
‘[Australia] negatively impacted the company’s adjusted EBITDA margin (as a percentage of gross transaction value) by approximately 30 basis points,’ it said.
Deliveroo has about 6,500 employees and drivers in Australia and would provide ‘guaranteed enhanced severance payments for employees as well as compensation for riders and for certain restaurant partners’.
Business boomed for all players in the market during the pandemic when Australians were stuck inside during lockdown and restaurants could only provide delivery and takeaway.