Restaurant meal delivery company Foodora will close its business in Canada after five years of operation. The company cited Canada’s “highly saturated market” for online food delivery and intensified competition as reasons for the closure.
“We’ve been unable to get to a position which would allow us to continue to operate without having to continually absorb losses.”
In a statement, Foodora in Canada said it has been unable to reach a sustainable level of profitability in Canada and therefore cannot continue operations. The business will continue to run until the end of the day on May 11. All employees and riders have been notified, and the company said employees will continue to be paid as specified in their contractual agreements.
Foodora Canada began as Hurrier, a Toronto-based startup, that was acquired by Rocket Internet-owned Foodora in 2016 and subsequently rebranded. The service was available in 10 Canadian cities.
“There [have] been some challenges along the way. We’re faced with strong competition in the Canadian market, and operate a business that requires a high volume of transactions to turn a profit,” said David Albert, managing director of Foodora Canada. “We’ve been unable to get to a position which would allow us to continue to operate without having to continually absorb losses.”
The move follows a ruling by the Ontario Labour Relations Board in February that Foodora couriers are eligible to join union and labour groups. The decision came after calls from Foodora and Uber couriers to allow the gig workers to join the Canadian Union of Postal Workers (CUPW) and United Food and Commercial Workers (UFCW).
Foodora’s decision also comes at a time when restaurants are limited to takeout, drive-thru, and delivery in many parts of Canada due to COVID-19 and to continue operations are having to rely on pickup or delivery services. At the beginning of April, CUPW penned an open letter to Finance Minister Bill Morneau on behalf of thousands of postal workers and Foodora couriers, arguing the Canada Emergency Response Benefit Act (CERB) was not inclusive of gig workers noting, “many gig-economy workers across the country will be unable to access the resources they need to survive during this crisis.” Foodora did not explicitly cite the current COVID-19 crises as the reason for its decision to cease operations.
Foodora said it is working on putting together a proposal to provide additional recovery to employees and other creditors as a result of this closure.
“I’m very proud of what Foodora has accomplished over the last few years,” Albert added.”I’ve been able to witness food delivery grow from its infancy into what it is today, and helping to build a brand I’m proud of.”
With files from Meagan Simpson
