Restaurant food delivery service Foodora is exiting the Canadian market after operating there for five years, according to a company press release. The Berlin, Germany-based company, a subsidiary of Delivery Hero SE, cited profitability as the reason for its departure.
“Canada is a highly saturated market for online food delivery and has lately seen intensified competition,” the release notes, adding that “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.”
Foodora also currently operates in a number of countries across Asia and Europe. The service’s Canada business, which operates across 10 cities, will continue until May 11.
While the press release highlights tough competition and a saturated market as reasons for its departure, Eater Montreal was quick to point out another factor that may have contributed to Foodora’s decision: Foodora’s drivers being allowed to unionize. In February of this year, the Ontario Labour Relations Board ruled that couriers working for the service should be classified as “dependent contractors.” Like California’s Assembly Bill 5, which was signed into law last year, this means Foodora would have to treat workers as employees, offering things like paid sick leave.
The press release mentions nothing about the Ontario Labour Relations Board decision. However, it costs delivery companies more money when workers are classified as employees, which could further erode their (still nonexistent) profitability.
Nor would this be the first time worker classification and profitability are linked when it comes to food delivery. As we wrote earlier this year, “Companies like Uber, Postmates and DoorDash are all under increased pressure from investors to become profitable. Laws like California’s AB 5 certainly complicate that path to profitability.”
And while Foodora’s decision to exit Canada doesn’t appear to be directly related to the COVID-19 pandemic, the restaurant industry upheaval the virus is causing has intensified the discussion around the third-party delivery model itself: it’s relationships to restaurants, control over customer data, and the way it treats the workers it needs to survive and maybe one day reach profitability.