Deliveroo Quits Hong Kong Amid Fierce Market Competition

Deliveroo, the FTSE 250-listed food delivery company, has announced its decision to exit the Hong Kong market after nine years of operation, citing overwhelming competition from rivals. The company revealed that assets from its Hong Kong operations will be sold to Foodpanda, a Singapore-based rival owned by Germany’s Delivery Hero. Liquidators have been appointed to handle the closure of remaining aspects of the business in the region.

The Hong Kong market contributed approximately five per cent to the group’s gross transaction value (GTV), comprising all food orders and delivery fees. However, intense competition, particularly from Meituan’s KeeTa, has significantly undermined Deliveroo’s position. KeeTa, which entered the market in May 2023, has aggressively gained traction among Hong Kong consumers by leveraging heavy discount schemes. Analysts have noted Hong Kong’s sensitivity to price reductions as a key factor impacting Deliveroo’s struggles.

Deliveroo has historically withdrawn from underperforming markets. In November 2022, it closed its Australian operations due to similar challenges, with competition from players such as Uber Eats and Menulog in a weakening economy. The company also exited the Netherlands and Spain markets in recent years for strategic and financial reasons, leaving Deliveroo with a presence in nine remaining countries following the Hong Kong withdrawal. These nations include Belgium, France, Italy, Kuwait, Qatar, Singapore, the United Arab Emirates, and the UK and Ireland.

Analysts have highlighted that the decision to leave Hong Kong aligns with Deliveroo’s prioritisation of shareholder interests, favouring closure over engaging in what would be an expensive and uncertain recovery effort. There is widespread acknowledgment that KeeTa’s entry significantly shifted market dynamics, effectively creating a duopoly in Hong Kong between Foodpanda and KeeTa after Deliveroo’s departure.

Despite the challenges in certain markets, Deliveroo remains optimistic about its financial performance. The company is set to release its full-year results this week, which are expected to show adjusted profits at the upper end of its £110 million to £130 million guidance range. Deliveroo shares rose slightly, closing at 126p, up by 1p or 0.8 per cent in London trading on Monday.

The decision marks another step in Deliveroo’s ongoing effort to refocus its global operations on markets where it has the strongest competitive advantage. Analysts warn, however, that smaller markets within Deliveroo’s portfolio could experience similar challenges if competition intensifies further in the future.