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London Tech Week

On-demand food delivery company Deliveroo exits Dutch market amidst growth in the UK

Deliveroo exits Netherlands
Image credits: Deliveroo

Deliveroo, a London-based food delivery appointment that operates worldwide, has announced its plans to exit the Netherlands market. The reason for the exit is the surge in losses as investment costs ate into rising revenues.

Deliveroo exit in the Netherlands

Deliveroo has witnessed a loss after tax jumped 41% to £153.8 million as compared with the first six months of last year. The revenue of the British group grew 12% to £1 billion despite easing Covid curbs and controversy over treatment of its riders.

However, Deliveroo founder and CEO Will Shu expressed the company’s ability to adapt financially to any further changes in the macroeconomic environment.

Deliveroo has planned to end its operations in the Netherlands as it does not hold a strong local position in the country. The food delivery app added that it would require a disproportionate level of investment, with uncertain returns, to reach and sustain a top tier market position. Notably, the exit from the Netherlands by the end of November follows Deliveroo’s exit from Spain in 2021.

Post this exit, the platform will have its service footprint in 10 markets, including Australia, Belgium, France, Hong Kong, Italy, Ireland, Singapore, United Arab Emirates, Kuwait and the UK.

“The Company has determined that it would require a disproportionate level of investment, with uncertain returns, to reach and sustain a top tier market position, and therefore has decided to consult on ending its operations in the Netherlands,” the company stated. “Deliveroo anticipates that the consultation process with relevant stakeholders will commence in August and is working towards a potential date for the final day of operations in the Netherlands towards the end of November.”

Growth in the UK

This news comes amidst Deliveroo’s growth in the UK and Italy. It added that the overall marketing and other investment costs, including spend on technology, jumped 29% to almost £369 million in the first half of this year.

Deliveroo has enjoyed strong sales growth within a short span of time but faces challenges related to sustainability. Its initial public offering was the capital’s biggest stock market launch for a decade, valuing the group at £7.6 billion.

However, the share price tumbled on launch day by almost a third from its IPO price of £3.90 as investors raised questions related to Deliveroo’s treatment of self-employed riders. Even in the Netherlands, Deliveroo has faced a similar legal challenge over couriers’ employment status.

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