As economic pressures mount around the world, multinational food delivery businesses are having a rough go of it. United Kingdom-based food delivery aggregator Deliveroo, for one, which operates in 11 markets across three continents, announced Wednesday (Aug. 10) a plan to shut down its operations in the Netherlands after the company failed to secure a top spot in the country.
“Our aim is to reach a top-tier position in the markets we operate in, of course focusing on the right hyperlocal positions,” Deliveroo CEO Will Shu told analysts on a call Wednesday discussing the company’s half-year 2022 financial results. “In the Netherlands, it’s quite clear that we don’t have a strong local position. We’ve also been there coming up on seven years, so I think we’ve had an ample amount of time to understand that market.”
Deliveroo said the Netherlands was 1% of its group gross transaction volume in H1 2022 and “sustaining a top-tier market position would require a disproportionate level of investment with uncertain long-term returns.” The company plans to wind operations down by the end of November.
Over the last year, there have been many major moves in the food delivery space around the world, with major players pulling out of key markets. German food delivery group Delivery Hero announced its Foodpanda brand was exiting Japan due to increasing competition and a lack of drivers to fulfill customer orders as well as its exit from six German cities.
Uber Eats, meanwhile, closed up shop in Brazil. Ultrafast grocer Jokr, for its part, exited the United States, where it had a presence in New York City and Boston, to focus on growing in Latin America, and Berlin-based ultrafast startup Gorillas pulled out of Italy and Belgium.
Read more: Uber Eats to Shutter in Brazil March 7
As food prices rise around the world, it becomes increasingly difficult for many consumers to justify the cost of ordering delivery when they could pick their meal up from the restaurant or prepare food at home.
Deliveroo, for its part, has seen sales growth slow both in its home country and even more so in its international markets. Shu noted that this trend “largely reflects” macroeconomic factors across these areas.
Similarly, competitor Uber noted on an earnings call earlier this month that the company’s delivery vertical has been coming up against challenges internationally. The company’s CEO Dara Khosrowshahi noted that, while Uber Eats performed well in the United States, global economic factors have had a negative impact on the business.
“Some of the slowdown in terms of delivery growth comes from foreign exchange, and it’s in a number of those European markets where we do see some of our competitors pulling back as well,” he said.
One of the main factors putting pressure on food delivery is inflation, and Deliveroo CFO Adam Miller noted that this challenge looks very different in different markets. He explained that the United Kingdom is seeing food and beverage prices continue to rise, while the Bank of France is predicting that, in the European Union, inflation has already hit its height and is expected to decrease going forward.
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