Business

Food delivery service Foodora says it's closing in Canada on May 11

Food delivery service Foodora says it will no longer do business in Canada as of May 11.

Company had been fighting an attempt to unionize with postal workers

Foodora launched in Canada five years ago. (Michael Wilson/CBC)

Food delivery service Foodora says it will close down in Canada next month in a move that comes as a shock to the union that was trying to represent the company's workers.

The company delivers cooked meals from restaurants to customers who order them on a smartphone app, taking a cut of the sale. It competes in Canada with services such as DoorDash, UberEats and SkipTheDishes.

Foodora is a subsidiary of German company Delivery Hero, which runs various food delivery services in 44 countries around the world.

Foodora launched in Canada in 2015. At last count, Foodora operated in 10 cities across Canada and had more than 3,000 restaurants on its menu, but the company said it isn't making enough money in Canada to stay open and will close on May 11.

"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," the company said. 

"We've been unable to get to a position which would allow us to continue to operate without having to continually absorb losses."

The decision comes as Foodora and other delivery services are experiencing a surge in demand because of COVID-19 lockdowns. And it's not just food, either — the company recently started offering deliveries of products as diverse as flowers, pet food, alcohol and coffee on its service.

Unionization fight

Foodora had also been engaged in a high-profile fight with its delivery drivers and riders, who voted on unionization last fall. The company challenged that ruling by arguing its delivery people are not employees but independent contractors.

The Ontario Labour Relations Board rejected that argument in February, and the results of the unionization drive were set to be revealed soon.

Foodora drivers had voted on whether to unionize with the Canadian Union of Postal Workers. The union told CBC News in an emailed statement on Monday that the company's decision came as a shock.

"We are currently reviewing our legal options," CUPW national president Jan Simpson said. "At this time, however, we want to focus on the hundreds of workers who have just been let go in the middle of a pandemic, with no Record of Employment, and unclear access to benefits such as the CERB."

Foodora is a subsidiary of German company Delivery Hero, which owns food delivery services in 44 different countries. (Fabrizio Bensch/Reuters )

The company says it let all of its riders know of the decision on Monday. They will all "continue to be paid as stipulated in their contractual agreements [and] the rider community has also been given notice period of termination," Foodora said.

Employment lawyer Lior Samfiru says Foodora couriers should be recognized as employees based on many factors, which would have them entitled to severance. But Foodora won't recognize them as such.

"They would be owed severance, now that they will no longer be working for Foodora, and that could potentially mean a few months' pay per person," Samfiru said in an emailed statement.

"This is especially true now, when it will be harder for these individuals to replace the income they have lost from Foodora. They may also be owed outstanding overtime, vacation pay, holiday pay and minimum wage."

By closing, the union says the company is showing it would rather leave hundreds of vulnerable workers without any income than make any changes to its business.

"Foodora and Delivery Hero must be held accountable to the workers," Simpson said. "Couriers have made millions for this company and deserve to be treated with dignity and fairness. In the middle of the COVID-19 pandemic, they are considering numbers over human lives."

About the Author

Pete Evans

Senior Writer, CBCNews.ca

Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, Canadian Business Magazine and — believe it or not — Circuits Assembly Magazine. Twitter: @p_evans Email: pete.evans@cbc.ca Secure PGP: https://secure.cbc.ca/public-key/Pete-Evans-pub.asc

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