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Deliveroo is shutting down in Australia.

The British food delivery service announced it has suspended orders made through its app and entered voluntary administration.

The "sad announcement" that it is folding in Australia was disseminated to customers on Nov. 16 via email.

Customers were shown an error message in the app if they tried to place an order on Wednesday.

The app is giving an error message but no other info: pic.twitter.com/MBPMKAljLA

— Patrick Stokes (@patstokes) November 16, 2022

The company has appointed KordaMentha as administrators.

Deliveroo added that customer’s account information would be available in its app for up to six months.

Australia a relatively small market

In the first half of the year, the Australian business had represented approximately 3 per cent of Deliveroo's total gross transaction value (GTV), Deliveroo said, according to Reuters.

Deliveroo was one of several food delivery services operating in Australia alongside Uber Eats, Menulog, HungryPanda and DoorDash.

Uber Eats and DoorDash are major players in the food delivery space in the United States.

What Deliveroo said

"This has been a difficult decision to make,” Deliveroo said in its email.

“Deliveroo, like all other companies, is now doing business in challenging economic conditions, which requires us to take difficult decisions."

"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.”

Citing Deliveroo's chief operating officer, he said the company had determined that it could not reach a sustainable and profitable scale in Australia without considerable financial investment.

Investor money flowing into such companies have dried up given the raising of rates by the U.S. Federal Reserve.

Push for better rights potentially raises costs

The Guardian also reported other challenges that Deliveroo faces, alongside many gig economy companies in Australia.

Deliveroo has been facing battles over workers’ rights in the past few years, with the federal government having promised to allow the Fair Work Commission in Australia to make orders for minimum pay and conditions for “employee-like forms of work”, The Guardian reported.

Deliveroo lost a Fair Work Commission case in May 2021 with the commission finding that sacking a rider for being too slow during the height of the Covid-19 pandemic was “harsh, unjust and unreasonable”.

However, the decision was subsequently overturned on appeal in August 2022.

Ensuring workers' rights are better protected is also occurring in Singapore.

New proposals here with recommendations to make Central Provident Fund contributions for gig economy workers who need it the most may come to pass soon after extensive consultations on the ground.

Top photo via Unsplash