Deliveroo to exit Hong Kong, sells assets to rival Foodpanda

British food delivery platform Deliveroo will shut down its Hong Kong operations next month, selling certain assets to rival Foodpanda, a unit of Delivery Hero, as it struggles to compete in the city’s fiercely contested market.

Deliveroo said on Monday it had appointed liquidators to oversee the closure of its business, with its Hong Kong service set to end on April 7, marking the end of its nine-year presence in the city.

"There are several dynamics specific to the Hong Kong market which led the Board to consider strategic options and… determine that it would not serve shareholders' best interests to continue operating in Hong Kong," Deliveroo said in a statement.

The company did not disclose the financial terms of the asset sale to Foodpanda. Delivery Hero said the agreement would allow Deliveroo’s customers, riders, and selected restaurant and grocery partners to transition to the Foodpanda platform.

Deliveroo entered Hong Kong in 2015, growing to partner with more than 10,000 restaurants. However, the company has faced mounting competition, rising costs, and shifting consumer behaviour in the post-pandemic recovery period.

Eric French, Deliveroo’s chief operating officer, thanked the company’s stakeholders in Hong Kong. "We want to thank all our employees, customers, riders, and restaurant and grocery partners who have been part of our operations. We have been proud to serve so many people such great food over the past nine years," he said.

Foodpanda’s parent company, Delivery Hero, framed the deal as a strategic expansion in Hong Kong. "This transaction will provide customers on the Foodpanda platform with access to a wider range of restaurant and grocery businesses, including some previously exclusive to the Deliveroo app," the company said, adding that vendors joining Foodpanda would gain access to a broader customer base.

Another Asia Pacific market exit

Deliveroo, which held a 30% market share in Hong Kong till 2023, has retreated following previous exits from Australia and Taiwan.

The company shut down its Australian operations in November 2022, citing intensifying local competition and a lack of strong market positioning. In 2022, Australia accounted for just 3% of Deliveroo’s total Gross Transaction Value (GTV) and dragged down the company’s adjusted EBITDA margin by approximately 30 basis points.

The food delivery platform's withdrawal from Hong Kong follows its 2020 exit from Taiwan which came amid economic uncertainty during the Covid pandemic. At the time, then-Hong Kong and Taiwan general manager Brian Lo maintained that the Taiwan closure would not impact Deliveroo’s Hong Kong business. 

Hong Kong’s food delivery sector has long been dominated by a few key players, with Foodpanda controlling 70% of the market and Deliveroo held the remaining 30%. However, competition from newer players is further squeezing profitability in an already challenging environment.

KeeTa, a food delivery service backed by mainland China’s Meituan, launched in Hong Kong in July  2023 has quickly expanded to cover the whole city.