# Foodora to cease operations in Australia later this month, but lawsuits still ongoing



## Hugh G (Sep 22, 2016)

*Foodora to cease operations in Australia later this month, but lawsuits still ongoing*

By business reporter David Chau
5:20 pm 2nd Aug 2018
http://www.abc.net.au/news/2018-08-02/foodora-pulls-out-of-australia/10066964

Food delivery company Foodora is pulling out of Australia, and will close its doors by August 20.

In a statement, Foodora said the reason for its Australian closure was to _"shift [its] focus towards other markets where the company currently sees a higher potential for growth"._

The company has been competing against rivals including *Uber Eats* and Deliveroo.

Foodora said it would ensure that its employees, "support partners" and contractors found "suitable alternative roles".

*Riders happy about the closure*

"I feel weird&#8230; this is nice news. It's like a dream come true," John Chessal, a Foodora delivery rider, said when the ABC broke the news to him.

"I know a lot of people who want to leave Foodora because it treats their riders badly."

Two weeks ago, Mr Chessal was hit by a car on a busy Melbourne street while delivering for the company.

He sustained a back injury, and his bicycle was damaged beyond repair during the collision.

When Mr Chessal asked Foodora to contribute to his medical expenses, the company refused.

He said the company told him: "That is not our responsibility as you're not an employee - every rider needs to look after himself on the road."

Mr Chessal received an email from Foodora about its closure half an hour after he spoke with the ABC. The email said:

"As the business is solvent, shifts will be available as per normal until 10th August 2018.

"Between 10th August 2018 and 20th August 2018, there will be a wind down of services with fewer shifts available.

"Accordingly, this email constitutes as written Notice that your Independent Contractor Agreements will be terminated effective 20th August 2018.

"If you wish to return foodora equipment such as food boxes and backpacks you may do so between Monday 6th August and Friday 24th August 2018, excluding weekends.

"Upon the return of foodora property (in Like Brand New condition) and the presentation of a deposit receipt we will refund your deposit."

  
*Photo:* Foodora's batch system rewards its best riders by giving them first pick of shifts, while punishing its bottom-performers. (ABC) 

*'Oppressive' internal hierarchy*
Another rider, Icce Mejier, did not believe Foodora's reason for leaving Australia.

_*"The company had so many problems - 'shifting its focus to other markets' sounds like an excuse to me.*_

*Foodora's 'hunger games'*

Foodora's delivery riders speak out about an "oppressive" policy which pits them against each other in a "survival of the fittest" contest.​
"I don't know what to say ... Foodora was always proud and boasting about how fast it was growing."

Last month Mr Mejier, along with other riders, told the ABC about Foodora's "oppressive" policy which pits riders against each other in a "survival of the fittest" contest.

This competitive hierarchy is called "the Batch", and it ranks workers according to who delivers the most food, works the most weekend evening shifts, and puts in the longest hours.

The best performers (Batch 1) are allowed to pick their shifts earlier than everyone else.

Batches 4 and 6 are the "worst" performers, and punished with a two-day delay.

These bottom performers are more likely to get shifts at far-away locations, and during times which are not necessarily the most convenient for them.

Mr Mejier was demoted to Batch 6 after he was hit by a car during a Foodora delivery, leaving him unable to work for weeks.

*Court cases outstanding*

Although Foodora will no longer compete in the Australian food delivery business, it still needs to defend two lawsuits.

Later this month, the company will return to the Fair Work Commission to defend an unfair dismissal case.

It is also being sued by the Fair Work Ombudsman for sham contracting.

Basically, that means misrepresenting its employees as independent contractors (who are their own bosses, running their own businesses) - to avoid paying minimum wage, annual leave, sick leave and superannuation.

Foodora, and its competitors, maintain that its riders are contractors - despite the high level of control it exercises over them, and requirement to wear a uniform.

The company's spokesperson said: "Foodora will continue to manage legal proceedings locally in Australia and will continue to treat them with the utmost importance."

"As the matters are currently before the courts, it is not appropriate for Foodora to make any further comment at this time."


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## Hugh G (Sep 22, 2016)

*'They start with a fingernail and end with an arm': Restaurants farewell Foodora*

*By Emma Koehn & Cara Waters*
4 August 2018 - 12:05am
https://www.brisbanetimes.com.au/bu...aurants-farewell-foodora-20180803-p4zvev.html
Restaurant owners are not surprised by Foodora's exit from Australia, with some saying the food delivery firm's reliance on bikes rather than cars put it at a significant disadvantage to the likes of UberEats.

Foodora announced on Thursday it would stop operating in Australia by the end of August.

Burger Urge co-founder Sean Carthew says it soon became apparent that Uber Eats had a significant advantage over the likes of Foodora, because it offered food delivery via car while Foodora drivers were predominantly on bikes.

"I think that the issue with delivering on bicycles is that in highly populated and dense cities like Melbourne, it might work. But in a city like Brisbane, it's not as appropriate," Mr Carthew said.

"It [the service] would depend on the individual fitness of the delivery rider."

Burger Urge, which has 26 burger chains, paid a 25 per cent commission to Foodora on orders made through the platform. Mr Carthew said his company's experience with the platform was that it was "too expensive".

*Unions call for Foodora compensation fund*

The Transport Workers Union is demanding the federal government set up a compensation fund for Foodora riders in the wake of the company's decision to exit Australia.

While Burger Urge still is on the Uber Eats platform, he said this had been done through gritted teeth, saying food delivery platforms in general have "eroded profitability significantly" for delivery in some stores.
Robert Galati, who owns Sydney-based Italian restaurant Fratelli & Co and Thai restaurant Baywok, uses Uber Eats and Menulog in his business and said he was not tempted by Foodora's offering.

"At the end of the day these aggregators all take a percentage so the fewer you have the better it is for your business," he said.

Mr Galati's restaurants turn over more than $1 million and food delivery makes up 10 per cent of his takings.

Mr Galati said he was happy to see Foodora exit Australia.

"I hope that this is a sign of things to come," he said. "At the end of the day nobody wants a business partner they haven't signed up for. They are business partners I never wanted. They start with a fingernail and then end with an arm."

However Uber Eats, the dominant player in the $20 billion delivery and takeaway market in Australia said it was committed to building a long-term, sustainable business in Australia.

"Our relationships with restaurants and delivery partners are incredibly important to us and we'll continue to invest in these partnerships," an Uber Eats spokesperson said.

Levi Aron, country manager of Australia for Deliveroo, said Deliveroo is looking forward to continuing to grow across Australia in the months and years ahead.

"As competitors move out, our priority continues to be bringing more amazing food to people whenever and wherever they want it," he said. "We are going from strength to strength in Australia, with revenue jumping by over 350 per cent in Australia in 2017."

Christopher Timm is the founder of Takeaway Solutions, an alternative to Foodora and Uber Eats, which offers a white-label online ordering and table booking product that small business can subscribe to without having to pay a commission on the value of orders.

Mr Timm believes it is clear the food delivery landscape is not sustainable in Australia. The cut that platforms take from businesses is too high and many of the platforms offer the same type of service, he said.

IBISWorld senior industry analyst, Andrew Ledovskikh, said concerns over remuneration and conditions for third-party delivery drivers and riders are an issue.

"This contractor status is vital to third-party operators, as it keeps costs down," Mr Ledovskikh said. "It means these companies do not need to provide award wages, superannuation or benefits such as long service leave. Without the ability to employ these drivers as contractors, many third-party delivery operators would see their business model become unprofitable."


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## Who is John Galt? (Sep 28, 2016)

Hugh G said:


> *'They start with a fingernail and end with an arm': Restaurants farewell Foodora*
> 
> *By Emma Koehn & Cara Waters*
> 4 August 2018 - 12:05am
> ...


Thanks for the update, Hugh.

.


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## Jay1960 (Feb 22, 2017)

_"When Mr Chessal asked Foodora to contribute to his medical expenses, the company refused.
The Transport Workers Union is demanding the federal government set up a compensation fund for Foodora riders in the wake of the company's decision to exit Australia."_

wtf - they are contractors not employees

Nice try Mr Chessal - you shoudve had your own insurance

As for the unions, god help all contractors if they get their filthy hands into the pie. Ridesharing and food delivery business will become unprofitable for everyone


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## Who is John Galt? (Sep 28, 2016)

Jay1960 said:


> ===/===
> As for the unions, god help all contractors if they get their filthy hands into the pie. Ridesharing and food delivery business will become unprofitable for everyone


Become unprofitable? LOL

Lordy, you are a funny Jay. This gig doesn't even pay a living wage, let alone a profit.

Yes, I'm sure the unions are busting their arse to get some of the action, some of the unimaginable wealth and untold riches that are generated by every delivery rider and rideshare driver, every day.

As we have seen over the last four years Tony Sheldon and the TWU have left no stone unturned in their efforts to conscript drivers and deliverers into an organised cohesive group to fight for better pay and conditions.

LOL

.


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## Jay1960 (Feb 22, 2017)

Who is John Galt? said:


> Become unprofitable? LOL
> This gig doesn't even pay a living wage, let alone a profit.
> 
> .


Please stop insulting the intelligence of readers on this forum. 
Only an idiot would think that partners are driving at a loss and paying Uber for the privilege


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## Who is John Galt? (Sep 28, 2016)

Jay1960 said:


> Please stop insulting the intelligence of readers on this forum.
> Only an idiot would think that partners are driving at a loss and paying Uber for the privilege


LOL. Yeah, only an idiot.

Only an idiot would believe that Über and its drivers are partners. And, only an idiot would believe that after drivers have paid themselves a wage, there is a profit remaining.

But what would I know. Unlike you, I can't claim "Trust me, I'm a retired accountant."

.


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## Jay1960 (Feb 22, 2017)

Who is John Galt? said:


> And, only an idiot would believe that after drivers have paid themselves a wage, there is a profit remaining.
> 
> .


I made $1000 last month on my BHP shares . But i bought them two weeks earlier
Damn - after paying myself a wage for that period , I actually made a $2000 loss.

Thanks John - I see the error of my ways now. Gonna give up share trading and go on the dole . Much more "profitable"


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## Who is John Galt? (Sep 28, 2016)

Jay1960 said:


> I made $1000 last month on my BHP shares . But i bought them two weeks earlier
> Damn - after paying myself a wage for that period , I actually made a $2000 loss.
> 
> Thanks John - I see the error of my ways now. Gonna give up share trading and go on the dole . Much more "profitable"


Sorry for your loss. CGT is a bastard isn't it? Try put and call options instead of the physical. Dollar for dollar, you might find they are more profitable. 

But what would I know? I'm not a 'retired accountant'.

.


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## PasJes (Mar 6, 2018)

So what's the difference between delivering for any of these companies? Are they significantly different? And why on earth would Foodora be bicycle centric? Seems odd.


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## UberDriverAU (Nov 4, 2015)

Jay1960 said:


> wtf - they are contractors not employees


Let's hope noone discovers _Hollis v Vabu_. Whoops.


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## Sammy3068 (Feb 6, 2018)

Hugh G said:


> *Foodora to cease operations in Australia later this month, but lawsuits still ongoing*
> 
> By business reporter David Chau
> 5:20 pm 2nd Aug 2018
> ...


I believe Fuber is practicing batch system as well.



Jay1960 said:


> _"When Mr Chessal asked Foodora to contribute to his medical expenses, the company refused.
> The Transport Workers Union is demanding the federal government set up a compensation fund for Foodora riders in the wake of the company's decision to exit Australia."_
> 
> wtf - they are contractors not employees
> ...


Union doesn't cause unprofitable for business. Union is actually trying to stop greedy corporation maintaining monopoly at the expense of exploiting. Once the loop hole is covered business will need to operate more efficient . Business corporation is to make profit, the boss doesn't care what rules around the bottom line is profit margin. Simple as that.

For example: Australia having huge reserves of gas. The gas price in australia is insane 4 to 5 times USA gas price . Australia is second largest exporter for gas. The reason being business corporation refused to sell it on Australia market , they sell to EAST Asia for higher profit margin. At the same time the corporation refused to boost production, they blame it on "environment regulations" but the truth is they not wanting to sell to Australia market. THE MINER AND ENERGY STILL SURVIVE DID THEY SHUT DOWN because of environment?

Business corporation not dumb they got the best accountant to help them.


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## PasJes (Mar 6, 2018)

If laws are changed so that delivery people are to be classified as employees, that's going to lead to either companies deciding to no longer operate in this industry, or they'll need to increase delivery prices and/or commissions charged to restaurants. Either way, it will drastically shrink this industry and lead to far less available work.

One could argue that at such low rates that will be no great loss, but I suspect for a bunch of guys that deliver, they'll be pretty pissed off.


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