Deliveroo, the UK-based food delivery group, is considering pulling out of Spain, citing limited market share (less than 2 per cent GTV) and the disproportionate level of investment required to keep it competitive in the market.
“The proposal to end operations in Spain reflects the Company’s intention to focus investment and resources on the Company’s other markets, continuing to grow its network of consumers, restaurant and grocery partners, and riders, and expanding market share in both new and existing towns and cities,” says Deliveroo in a statement.
Deliveroo’s announcement came after the Spanish government adopted a law that requires food delivery platforms to hire their couriers.
Back in May, the Spanish government gave food delivery platforms a three months deadline to convert their gig workers into staff workers, one of the first laws in Europe regarding gig-economy workers’ rights.
According to the labour ministry’s calculations, nearly 17,000 riders without a contract have already been identified.
Uber’s spokesman said, “This regulation will directly hurt thousands of couriers who use food delivery apps for much-needed flexible earnings opportunities and made it clear they do not want to be classified as employees.”
Compensation and goodwill packages
The company says its decision to withdraw from Spain remains subject to a full consultation with impacted employees and riders, which will begin in September and last around a month.
Hadi Moussa, Chief Business Officer, International, Deliveroo says, “The decision to propose ending our operations in Spain is not one we have taken lightly. We want to thank all of the restaurants who work with Deliveroo in Spain, as well as our fantastic customers. Particular thanks go to the thousands of brilliant, hard-working riders who chose to work with Deliveroo, as well as our talented and committed employees. They will be supported throughout the consultation period.”
If the decision is confirmed, the UK company said it would ensure appropriate compensation and goodwill packages were paid to staff.
Pulled out of Germany in 2019
In Spain, Deliveroo faces competition from various companies like Uber Eats, Glovo, Just Eat, and others. It’s worth mentioning that the company pulled out of Germany back in 2019 due to tough market penetration.
Currently, Deliveroo operates in 12 markets worldwide, with the majority of its GTV (Gross Transaction Value) coming from countries where it holds number one and two positions in the market.
In April, Deliveroo was listed in London and suffered a dismal stock market debut due to various reasons including, workers’ exploitation, dual-class share structure, uncertainty, and more.
All about Deliveroo
The company was launched in 2013 by William Shu and Greg Orlowski. Deliveroo owns and operates an online food delivery platform in the UK.
Its platform allows users to order food from local restaurants. Deliveroo operates in over 500 towns and cities across 12 markets, including Australia, Belgium, France, Hong Kong, Italy, Ireland, Netherlands, Singapore, Spain, United Arab Emirates, Kuwait, and the UK.
It has over 2,000 employees worldwide. Furthermore, the company partnered with supermarket brands including Waitrose, Sainsbury’s, Morrisons, Aldi, and Carrefour to grow its on-demand grocery offering amid the pandemic.