Is it a coincidence? At the end of November, meal delivery company Deliveroo wants to cease its activities in the Netherlands. A month before a long-awaited decision by the highest court, the Supreme Court.
This is expected to confirm the verdict of lower courts: that all bicycle couriers should be paid and treated as employees, instead of as self-employed. This gives them the right to vacation days, continued payment in the event of illness and pension.
But by the time the final verdict is passed, the British meal deliverer hopes to have already left. Although the departure from the Netherlands, announced on Wednesday, is not yet final. The company plans to discuss this intention with “stakeholders” such as employees and trade unions in the near future.
Trade union FNV, which has filed the lawsuit against Deliveroo, claims the departure of the meal deliverer as a success. But Deliveroo itself provides very different reasons for leaving the country.
Since the company entered the Dutch market in 2015, it has not managed to capture enough market share, CEO Will Shu explained to analysts on Wednesday at the presentation of the half-year figures. While that is essential to ever become profitable.
The attempts to increase the Dutch market share can best be stopped now, according to Shu. Otherwise it would require ‘disproportionately high investments’, ‘with a rather uncertain return’.
‘Super small’ market
In addition, Deliveroo can do without the Dutch market. That is of “marginal” importance for Deliveroo, says analyst Michael Roeg of investment bank Degroof Petercam. “I don’t think anyone outside the Netherlands is aware of this departure.”
CEO Shu called the Netherlands “a super small market”. Deliveroo gets 1 percent of its global ‘gross transaction value’ from the Dutch market: the total value of all orders.
Moreover, the move fits in with a broader trend: meal delivery companies are more likely to leave countries where their market share remains too small.
Deliveroo did not name the impending judgment of the Supreme Court on Wednesday as a consideration for the departure. Does that make it irrelevant to the company?
On the contrary, says analyst Roeg. A victory for the FNV would overturn Deliveroo’s business model in the Netherlands. “It would then have to hire people and pay extra retroactively. Your cost level then goes up, which means that your profitability is further out of sight.”
Deliveroo has so far failed to respond to the court and the court of appeal, which have previously ruled that the bicycle couriers are in fact employees and should be treated as such. In the meantime, the meal deliverer litigated until the highest court.
He will probably reach the same conclusion as the lower courts at the end of this year. At least that is the advice of the Advocate General at the Supreme Court, which was delivered in June was made public. The judges usually follow that advice.
So no, the fact that Deliveroo wants to leave just before this judgment does not seem so coincidental, says Roeg. But according to the Deliveroo spokesperson, who only wants to respond in writing, there is no connection. “Our decision is independent of the decision of the Supreme Court,” she writes. “This is an economic decision.”
monopoly
Deliveroo has to be legally accountable in many more countries for the deployment of self-employed workers. In April, a French criminal court convicted not only the company but also two former Deliveroo bosses for violations of labor law. They received a one-year suspended prison sentence and a fine of 30,000 euros. The company is also appealing this.
In the Netherlands there are now two large meal delivery companies left: the Dutch Just Eat Takeaway, with by far the largest market share. And the American Uber Eats. Just Eat Takeaway’s bicycle couriers are employees who work for Uber Eats as freelancers.
Both companies will see their market power increase once Deliveroo leaves the country. In theory, this makes it easier for them to demand higher rates from consumers and restaurant owners.
Analyst Roeg, however, nuances the consequences of this possible monopoly. Some restaurants and chains (Domino’s, New York Pizza) arrange their own deliveries, he says. Other restaurants may also opt for that. And consumers? “I think they are more concerned with their energy bills than with the competition in this market.”