Deliveroo was losing around $3 million a month on its Australian operations, administrators KordaMentha found, with revenue sliding this year in the wake of 2021’s pandemic lockdowns.
The business has put a Deed of Company Arrangement (DOCA), backed by the administrators, on the table offering a total of $18.8 million to staff, delivery riders and other creditors.
KordaMentha issued its report to creditors on Deliveroo Australia Pty Ltd (Deliveroo Australia) today recommending they vote in favour of the DOCA put forward by the UK-listed parent company Roofoods Ltd.
Administrator Michael Korda said the DOCA would fairly resolve all claims on Deliveroo Australia and facilitate the company’s timely, efficient and controlled departure.
The proposed DOCA provides $9.5 million to employees, riders, restaurant partners and suppliers to be paid in January next years
A further $9.3 million is for remaining creditors, to be distributed in April 2023, with 100% of the claims by restaurant partners, customers, suppliers and other unsecured creditors paid.
Mr Korda said the DOCA provides for enhanced ex-gratia payments to Deliveroo’s employees and riders, “above and beyond” their statutory entitlements, with employees paid at 169% of what they’re owed and riders scoring, on average, 342% of their entitlements. KordaMentha did not offer an average figure, but the business had more than 120 employees, serviced around 12,000 restaurants and engaged 15,000 delivery riders as contractors.
It’s believed to be a fortnight’s pay based on average weekly earnings over a year, plus an ex-gratia one week.
Creditors will meet to consider the DOCA and the administrators’ recommendations on December 21 ahead of the second creditors’ meeting.
The report into the delivery company’s operations reveal its lost money during the entire seven years of local operations, with the average cash loss rising to around $3 million per month in 2022.
Covid lockdowns were kind to Deliveroo, with its revenues up, peaking at $14.9 million in net revenue in August 2021. But revenue fell this year and the ongoing losses are reflected in a $123 million loan on the local books to Deliveroo’s UK HQ.
The London Stock Exchange-listed parent company withdrew its support for Australian operations in mid November, handing the business over to KordaMentha to wind up.
The nine-year-old company. which has seen its share price plunge more than 50% over the last 12 months, shut down operations in the Netherlands on November 30.
This year has been a graveyard for food delivery startups with Sydney grocery delivery venture Voly ceasing operations last month, just 12 months after launch. Rival Send shut down in May this year.