Foodora, the takeout delivery app, will be pulling out of operations in Canada according to Now Canada.
The Berlin-based company noted in a press release, that it has “filed a notice of intention” to shut down because of heightened competition resulting in lack of profits. The company will end its service on May 11.
“Canada is a highly saturated market for online food delivery and has lately seen intensified competition,” reads the statement. “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.”
The company says it is “putting together a proposal to provide additional recovery support to employees,” though further details have not been provided.
“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, Foodora Canada’s managing director. “We've been unable to get to a position that would allow us to continue to operate without having to continually absorb losses.”
This follows a decision by the Ontario Labour Relations Board (OLRB) to appoint Foodora couriers as “dependant contractors” instead of independent ones. This gives workers the right to form a union legally.
Couriers have been trying to join the Canadian Union of Postal Workers (CUPW) beneath the Foodsters United Banner since 2019. Foodora called its couriers independent allowing the company to avoid paying for sick days, lost wages from injuries, or gear.
“This win is a big precedent for anyone in the gig economy who worries about their health, safety, and security,” said Pablo Godoy from the United Food and Commercial Workers International Union Canada. “Fighting misclassification has become a viable avenue to unionization, in some very unstable and dangerous workplaces, and for many very precarious workers.”
Foodora has been doing business in Canada for five years and has spread to 10 cities.