Cash-Strapped Foodora Owes Money to Lots of Montreal Restaurateurs

A delivery bag for Foodora | Massimo Parisi/Shutterstock.com

It also owes over $500,000 in taxes

Food delivery app Foodora owes tens of thousands of dollars to a long list of Montreal restaurants — and it seems possible that those businesses may not see their money.

Last week, the Berlin-based company announced that it would be leaving the Canadian market entirely. At the time, some argued that the company’s departure was due to a recent decision by the Ontario Labour Relations Board allowing its couriers to potentially unionize, even though Foodora does not classify them as employees. As with many other companies in the gig economy, it considers those couriers “independent contractors”, meaning they do not receive benefits, sick days, and other conditions that might be offered to regular employees (that said, Canada does not require companies to offer paid leave to employees, either).

However, it seems that Foodora was likely facing financial troubles regardless of the union drive in Ontario — not long after announcing its impending closure, Foodora more quietly indicated that it would file for bankruptcy, with debts of about $4.7 million, telling couriers of its plans via an email obtained by Eater.

As reported by NOW Toronto, a list of creditors has since surfaced, to whom Foodora owes money — it stretches across 87 pages and lists around 1,300 businesses, almost all of which are restaurants (the document only lists those owed more than $250, so there are presumably many other restaurants owed smaller sums).

The debts are from orders that restaurants have already filled: After customers order on the app, they pay their entire bill to Foodora. The company then transfers money on to restaurants, after taking out its own fees — or at least, that’s how it’s supposed to work.

Most of the restaurants Foodora owes are located in the metropolitan areas around Montreal, Toronto, and Vancouver, although it’s also in debt to a smaller number of restaurants in Quebec City, Ottawa, Calgary, and Edmonton.

In Montreal (including Laval), Foodora owes more than $250 to approximately 380 restaurants. Almost all of those debts are under $1,000, but a small number are higher. The largest debt is to Plateau poutine favourite La Banquise, which is owed $8,580. Salad spot Mandy’s is owed $5,800 (across four locations in Montreal), while iconic deli Schwartz’s is owed $2,958.

Other bigger debts are owed to:

  • Aux Vivres ($3,118 across two locations)
  • Bombay Mahal ($2,712 across three locations)
  • Kwizinn ($1,206)
  • La Maison Thai ($1,594)
  • Le Kioko ($1,880)
  • Patati Patata ($1,627)
  • Pizzeria Heirloom ($2,095)
  • Sozo Sushi ($2,420)

A number of chain restaurants, like A&W or Montreal’s Boustan, are also owed totals in the thousands, although these debts have been split up across individual locations for such restaurants.

Despite apparent cash flow issues, Foodora still plans to operate until the end of Monday, May 11. It seems that the company may be hoping to recoup some of its debts by continuing to operate for two weeks after it announced it would leave Canada, while there’s a captive market for food delivery. Lockdowns due to the ongoing coronavirus pandemic have forced many restaurants to get into delivery, and many of those restaurants have opted to offer delivery through apps like Foodora, Uber Eats, or Doordash, rather than hiring and managing their own couriers.

In short, that means delivery apps are one of the few companies that might see increased business during the pandemic but the news of Foodora’s demise means that it might be a risky decision for restaurants and couriers to work with the app in its final days, given that there’s a distinct possibility they may not see their money (Foodora has said that it plans to pay restaurants, though). Plus, according to the Toronto Star, creditors (read: restaurants owed money) will have the ability to vote in bankruptcy proceedings.

Beyond restaurants, there are a handful of major sums that Foodora owes to other entities — around $500,000 in apparently unpaid taxes is owed to the Canada Revenue Agency and Revenu Québec, while Foodora also owes over $100,000 each to the provincial labour boards of Quebec and B.C. It appears to owe over $1 million to its own office employees, and $243,000 to its couriers — and a whopping $520,000 to its own parent company, DeliveryHero.

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