That may have contributed to the timing of the announcement.įrom this juncture, Deliveroo spends three paragraphs discussing how it will support workers in case it does leave the Spanish market. This is where labor issues like this come into play - investing to gain market share in a country where your business is less profitable is hard to pencil out.Īnd according to El Pais, the decision by Deliveroo comes as it was up against a deadline regarding worker reclassification. To gain lots of market share in Spain would be very costly, and the company isn’t sure about the long-term profitability of the country’s business.

Translation: Spain is a very small market for Deliveroo. The Company has determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns that could impact the economic viability of the market for the Company. Spain represents less than 2% of Deliveroo’s GTV in H1 2021. We are not in a leading position in Spain. Most of our order volume comes from markets where we are in a leading position (the company competes with Uber Eats, Glovo and Just Eat in different markets). Translation: We’re probably leaving Spain. Deliveroo currently operates across 12 markets worldwide, with the vast majority of the Company’s gross transaction value (GTV) coming from markets where Deliveroo holds a #1 or #2 market position. Here’s the introductory paragraph:ĭeliveroo today announces that it proposes to consult on ending its operations in Spain. Let’s parse the Deliveroo statement to better understand the company’s perspective. The possibility of worsened economics makes such changes to labor laws in any market a worry for startups and public companies alike that lean on freelance delivery workers. This is the sort of arrangement that on-demand companies in food delivery and ride-hailing have long fought many on-demand companies are unprofitable without hiring couriers, and doing so could raise their costs. Recall that Spain adopted a law in May - a law generally agreed to in March - requiring on-demand companies to hire their couriers.

In the case of Spain, it appears that Deliveroo is concerned that changes to local labor laws will make its operations more expensive in the country, which, given its modest market share, is not palatable. Given its rising growth expectations and improving public-market valuation, you may be surprised that Deliveroo is willing to leave any of the 12 markets in which it currently operates. However, shares of Deliveroo have since recovered, and the company’s second-quarter earnings report saw it raise its expected gross order volume growth expectations “from between 30% to 40% to between 50% to 60%.” Its shares initially sagged, drawing concern about both the value of on-demand companies and tech concerns listing in London more broadly. The company, an on-demand outfit based in the U.K., went public earlier in 2021. Deliveroo announced today that it is considering leaving the Spanish market, citing limited market share and a long road of investment with “highly uncertain long-term potential returns” on the horizon.

Deliveroo spain theguardian