Distribution Application Foodora Is Shutting Down Its Canadian Procedure in May [Updated]

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A statement from the company indicated that it was “continually [absorbing] losses” in Canada

Food delivery app Foodora will shut down its Canadian operation in early May, according to an email sent to its delivery riders on Monday afternoon.

The app’s final day in service will be May 11 — all deliveries will end by 11:59 p.m. that night.

The email sent to delivery workers did not give any direct reason for why the company was leaving Canada.

We regret to inform you that we have taken the difficult decision to exit the Canadian market and close down foodora Inc., the Canadian subsidiary of Delivery Hero SE.

Restaurants will be able to use Foodora’s platform up until May 11 (inclusive), and riders will continue to work for the company until then — Foodora’s email notes that they would receive their final payments on May 13.

Shortly after the email went out to couriers, Foodora issued a press release disclosing the news, and giving further explanation for the company’s departure from Canada:

Canada is a highly saturated market for online food delivery and has lately seen intensified competition. foodora has unfortunately not been able to reach a strong leadership position, and has been unable to reach a level of profitability in Canada that’s sustainable enough to continue operations.

“We’ve been unable to get to a position which would allow us to continue to operate without having to continually absorb losses,” the statement continued.

A few hours after the announcement, another email went out to Foodora’s couriers that hinted at a possibly dire financial situation within the company. The message noted that the company would be filing a Notice of Intention to Make a Proposal, a manoevre that companies typically make when they’re financially struggling and possibly unable to pay its debts. However, the message to couriers did not indicate whether this would affect their pay, and it did not spell out where the companies debts lie.

It’s unlikely that the ongoing coronavirus crisis directly caused Foodora’s demise — with dining rooms closed across the country, substantial numbers of restaurants have been signing up to delivery apps like Foodora and its competitors (Uber Eats, DoorDash), including plenty of restaurants that previously did not offer take-out or delivery options — basically, a new revenue stream for the company.

Some commentators on Twitter hypothesized that there’s another possible reason for the departure: a decision by the Ontario Labour Relations Board in February allowing Foodora’s couriers to unionize.

Like many delivery apps (not to mention ride-hailing services like Uber and Lyft), Foodora classified its couriers as independent contractors, meaning it did not have to offer conditions that a company would typiucally be required to give to employees — the Labour Relations Board decision effectively reclassified them as dependent contractors, meaning Foodora would have to make concessions to them, costing it money.

It seems that Foodora is still trying to adhere to the line that its couriers are independent of the company — the press release announcing the company’s departure from Canada refers to “employees” and “riders” (i.e. couriers) as separate categories.

It’s important to note that Foodora’s union was not yet certified (the results of a union vote have been sealed for some months), although it’s possible the Foodora knows more details about it than were publicly available, and that behind-the-scenes information informed its decision to leave Canada.

Despite ditching Canada, it doesn’t seem that Foodora’s parent company Delivery Hero is struggling — less than a day after the decision to leave Canada was announced, the company’s co-founder tweeted that the company had drastically increased its revenue during the first quarter of 2020.

Foodora’s parent company is based in Berlin, Germany, and it expanded to Canada five years ago. It was one of the earliest delivery apps to expand broadly throughout Canada, pre-dating big names like Uber Eats and Doordash.

This story is breaking and will be updated.

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