Deliveroo fallout devastates food industry

Thousands of Australian restaurants and delivery riders have been left scrambling to recoup money and find work after the sudden closure of Deliveroo, with some outlets short-changed by tens of thousands of dollars and missing up to a third of their regular trade.

But industry experts warned Deliveroo's closure could be the first of several meal-delivery services to disappear due to challenging economic conditions, and prices for deliveries may rise to make the industry more sustainable.

Deliveroo shocked employees, contractors, partners and customers on Wednesday when it announced it would go into administration and stop operating in Australia immediately.

The company's website was wiped overnight and its app no longer functions.

Nick Tuckwell, owner of the Canberra burger chain Grease Monkey, said he discovered Deliveroo's closure in a social media post even though the company had been the restaurant's exclusive delivery partner for years.

"We had 30 per cent of our business go away yesterday," he said. "We're out north of $30,000. That would have been three days' trade and also a marketing fund.

"The real killer is the lack of notice. If we were told we had 30 days to sort it out, we could have moved and adapted but to not be told anything and be left in the dark was extremely frustrating."

Mr Tuckwell said the news was particularly shocking as it came just hours after a two-hour meeting with Deliveroo's marketing team.

Australian Foodservice Advocacy Body chief executive Tony Green said restaurants and cafes using Deliveroo exclusively would be hit hard by its closure, and the industry needed to pay close attention to how much money administrators repaid to those businesses.

But Mr Green warned Deliveroo may not be the last food-delivery service to close as consumers were tightening their belts and the market was no longer growing as fast as it had during COVID-19 lockdowns.

"This is a bit of a canary in the coal mine, to some degree. I think there'll be more of this happening," he said.

"For food service, we've gone through a massive change, we've got more pressures, we've got more challenges. We're going to see businesses going under in the next 12 to 24 months."

Deliveroo's Australian closure, which came after the business shut operations in Germany, Taiwan, Spain and the Netherlands, also affected up to 15,000 delivery workers who the company classified as contractors.

Deliveroo Australia confirmed the workers would be eligible for four weeks' compensation based on their annual earnings.

But UNSW Sydney associate professor Dr Rob Nicholls said it was delivery workers who may suffer the most from the company's closure.

"No restaurant is going to say 'well, if Deliveroo is out of the game, we'll stop using a delivery service'," he said. "They'll shift to one of the other big three services almost certainly.

"Some of the riders will be able to get gigs with other platforms but, ultimately, some will not be able to find work. It is a hard time for gig economy workers."

Dr Nicholls said Deliveroo's shutdown should encourage governments to regulate food-delivery services and change what he called "precarious contracting" for delivery workers.

Consumers may have to pay more to have meals delivered, he warned, or visit restaurants to collect takeaways.

"As the other services continue, they're likely to increase charges," he said. "At some point people will either pay more or say, 'you know what? I'll walk there instead'."