‘Too unexpected’: Shock, frustration as riders, eateries and users rue Deliveroo’s Singapore exit

SINGAPORE – For delivery worker Khaliq Saleh, the

winding down of delivery platform Deliveroo’s operations in Singapore

was frustrating and came out of the blue.

The delivery rider of about seven years, who cycles to deliver food, felt Deliveroo was the “most flexible” platform to complete orders on and its impending exit came “too unexpectedly”.

For one thing, he could reject orders without incurring penalties if the pick-up or delivery locations were too far or if the fees were not ideal.

With Deliveroo’s withdrawal from Singapore, the 25-year-old told The Straits Times he will be looking for a full-time job in the engineering or logistics sector.

He feels that because of the expected surge in delivery riders working for the other two major platforms, Grab and foodpanda, he will face difficulties getting orders assigned to him.

On Feb 25, Deliveroo announced it will stop operations in Singapore on March 4.

Describing it as a “difficult situation”, the platform said it had concluded that the level of investment needed for its operation here was not aligned with its long-term strategy.

Aside from delivery workers, customers and eateries also expressed disappointment and surprise at Deliveroo’s sudden pull-out, especially at short notice.

Experts said Deliveroo’s departure may result in Grab and foodpanda lowering prices to attract customers previously loyal to Deliveroo, but eventually raising them due to reduced competition.

Grab said on Feb 26, a day after the news broke, that it is “fast-tracking” the onboarding of delivery riders and eateries onto its platform.

It will also waive activation and device fees for eateries, to help them get ready to receive orders without delay.

Foodpanda acknowledged that Deliveroo’s announcement may create uncertainty for restaurants, delivery riders and customers.

Noting that many restaurants and riders are already operating across multiple platforms, it said the ecosystem is “resilient” and able to adjust to changing market conditions.

The platform added that it is open to engaging with restaurants and riders that are reviewing their options to ensure a smooth transition.

Mr Seth Ong, 34, a delivery cyclist with Grab and Deliveroo, feels he will not be significantly affected by Deliveroo’s closure, as he can switch over to other platforms.

Delivery worker Mike, who spoke to ST on condition of partial anonymity, has relied heavily on taking orders from Deliveroo for the past five years. He said he finds himself in a “sad and very difficult situation”.

The 36-year-old primarily used Deliveroo because he felt it was the only food delivery platform that allocated orders to walkers – who deliver orders on foot – reasonably, in terms of distance and fares.

For instance, a typical order within the Central Business District involving a 400m walk earns him $5.

He added that he also had the freedom to reject orders that were too far away, as Deliveroo did not impose a penalty for that.

Mr Mike said he plans to secure a job as a night security officer. But in the meantime, as it would be a “scramble” to find a new job in a week, he will deliver food for Grab and foodpanda, where he already has accounts.

Eateries and customers surprised, disappointed

Some eateries such as Italian restaurant Limoncello Pizza and Grill have had long-time exclusive partnerships with Deliveroo and were surprised by the news.

Mr Alessio Fraquelli, general manager at the restaurant located in Robertson Quay, said the proposed seven-day termination timeline feels “rushed”, adding that it could affect 13 per cent to 17 per cent of Limoncello’s earnings if the restaurant is unable to secure a partnership with another delivery platform.

He added that he hopes that Deliveroo will honour its “outstanding payments”.

Ms Aurelie Zeller, general manager of marketing and support services at Foodsta Kitchens, which oversees fried chicken store SIDES, said delivery orders make up a limited share of the store’s revenue in comparison with dine-in sales, so the impact of Deliveroo’s closure is expected to be minimal.

She added that her team is in the process of onboarding the SIDES outlet in Bugis+ mall onto foodpanda and Grab, estimating that the delivery listings will go live on both platforms in the next few days.

Salad bowl shop The Daily Cut, which fulfils delivery orders exclusively via Deliveroo, said: “As with most people, we too are disappointed with Deliveroo’s decision to exit the Singapore market.”

Ms Ethel Tan, co-founder of bakery Edith Patisserie, said her business will not be hugely affected, as it does not rely substantially on Deliveroo for orders. It is also listed on Grab and foodpanda.

She, however, said her business does not have much bargaining power when it comes to commission rates on these platforms, so she hopes they do not increase these fees.

According to Ms Tan, Deliveroo’s commission rate is around 30 per cent, while Grab’s is slightly higher, and foodpanda’s is at about 26 per cent.

Mr Saran Raj, who is a long-time Deliveroo user of 10 years, expressed shock and sadness at the news of the platform’s closure.

The cybersecurity manager has been on a monthly subscription plan with Deliveroo since 2021.

He noted that the service quality was “better” than the other food delivery platforms, with smooth service recovery.

The 37-year-old said he may try ordering food on foodpanda in future, but will attempt to wean himself off food delivery.

Mr Clint Ng, 33, has made a lump-sum payment for an annual subscription with Deliveroo and is worried that he will not receive a refund.

The regulatory affairs manager has more than six months left on his plan, which amounts to about $70.

Mr Ng said he is unhappy with how Deliveroo announced its Singapore exit to its customers via an in-app notification, and did not provide details about unspent vouchers or refunds on subscriptions.

ST has contacted Deliveroo for comment.

Reduced choice, market competition

Associate Professor Kelvin Seah from the department of economics at the National University of Singapore, said Deliveroo’s exit would reduce consumer choice and decrease competition in the market.

He added that the remaining food delivery providers could raise delivery fees and prices, but it is likely that they would not do so for now, as they would try to attract customers previously loyal to Deliveroo.

Prof Seah, who specialises in labour economics, said delivery riders would have fewer choices of platforms to work for.

This means that the firms that remain could set lower delivery fees and incentives, causing a decline in their earnings.

Echoing this, Dr Mathew Mathews, head of the social lab with the Institute of Policy Studies at the National University of Singapore, said delivery riders would have less bargaining power and may experience a further depression in their wages.

Dr Mathews said the lack of transparency behind these platforms’ algorithms makes it difficult to assess if riders’ earnings will decline with reduced competition between platforms.

This situation highlights that platform workers will bear the brunt of market risks when there are changes in business strategies.

He said this could be a sign for delivery riders to upskill or retrain themselves for roles that are more likely to be in demand.

Assistant Professor Lee Wee Kiat, from the College of Business at Nanyang Technological University, said the immediate disruption to consumers should be limited.

But he cautioned that in the long run, they may have less choice and face higher delivery fees due to weaker competition.

Prof Lee added that most riders should be able to shift to the other food delivery platforms easily, but they may face stronger competition for orders during off-peak periods due to the increase in riders.

For eateries, he said the operational disruption may be manageable if they were already on multiple platforms to begin with. However, the loss of a third platform would reduce merchants’ bargaining power over commissions, visibility and promotional terms in future.

On the possibility of a new food delivery platform, Prof Seah is of the view that it is unlikely to happen any time soon, as the two incumbent platforms Grab and foodpanda have extensive networks of users and eateries.

As a result, new entrants would need plenty of financial backing or a differentiated and innovative business model to compete effectively against them.