Deliveroo is leaving the German last-mile food delivery market

The last-mile food delivery space is one of the most crowded in terms of players, with little to differentiate between the companies in terms of services or price points, except the brand itself. This leaves market capitalization largely to chance and great marketing, as companies lack noticeable leverage over competitors. 

Customer loyalty does not count for much in such a situation, with customers often installing several food delivery apps on their smartphones, not caring to stick to one company for all their food delivery needs. To gain market share, companies are forced to resort to discounts and attractive offers – a strategy that companies cannot afford to fund infinitely. 

The result is consolidation through mergers and acquisitions, and in some cases, market exits as Deliveroo did today. Europe is increasingly becoming a market where considerably deep pockets are essential to make a splash within the food delivery space. For Deliveroo, the decision to not continue seeking an elusive customer base in Germany might partially be driven by the consolidation between its pan-European rivals like Delivery Hero, Takeaway.com and Just Eat. 

The Deliveroo services will cease on August 16, and the company has mentioned that it will now focus its energy on accelerating growth and expanding into other markets in Europe and the Asia-Pacific region. 

The company is also providing compensation to its riders who have been active on the platform over the last 12 weeks. The riders are entitled to a goodwill payment of 10 days’ pay, which is based on their average weekly earnings over those 12 weeks. The riders also get another goodwill payout of two weeks’ pay, based on the same criteria. 

Employees being let go will receive a statutory notice and a payment of two weeks’ for workers who were with the company for less than a year, and a payment of a month’s wages for people who have been with the company for more than a year.