Deliveroo Pulls Out of Germany in Abrupt Retreat
Amazon-backed food-delivery service Deliveroo announced an abrupt retreat from Germany after more than four years, according to Bloomberg. They are a casualty of increasingly cut-throat competition tearing through the industry.
The service will cease operations in Europe’s largest economy on Aug. 16, telling customers in an email that it can no longer offer the desired “brilliant” service standard. Instead, Deliveroo will focus on “growing our operations in other markets around the world.”
Deliveroo’s German business is the latest victim in the European food-delivery industry, which has long suffered from expensive competition that has forced established players to consolidate or close shop. Takeaway.com agreed to buy the German businesses of Delivery Hero last year to end an expensive rivalry in the country. Britain’s Just Eat and Takeaway are now pursuing an all-share 5 billion-pound combination.
The firm employs riders that cycle restaurant meals to customers’ doors in boxy backpack containers emblazoned with Deliveroo’s logo. It’s a business model that’s logistically more challenging than simply offering a platform to connect restaurant and foodie. The service is available in larger cities, though Deliveroo already began retreating from some of them last year, including Leipzig or Stuttgart.
It’s especially tough to make money in Germany, where consumers don’t order as often as their counterparts in the U.K. or the Middle East, and where riders can go on strike and form unions. Takeaway already buried the Deliveroo clone Foodora, which operated alongside Deliveroo in Berlin, and Uber Eats never started in the country.
Deliveroo hasn’t ruled out returning to the German market in the future, according to a person familiar with the matter. It will refocus its resources first to grow its business in other parts of Europe and the Asia-Pacific region. Job losses for employees, riders and restaurants will be compensated, the person said.