Deliveroo unveil their plan to pull out of Spain saying it would require a “disproportionate level of investment” to achieve top market position.
Deliveroo announced plans to pull out of Spain only months after the government promised a law to give gig economy workers greater employment rights.
The company said remaining in Spain would require too much investment given the scale of its operations in the country.
Deliveroo has small market share in Spain
The takeaway app company says “achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns that could impact the economic viability of the market for the company”. This is due to their relatively small market share.
Spain’s employment law not determining factor
A spokesman for Deliveroo said Spain’s employment rights law was not the determining factor. However, they added it had resulted in an earlier withdrawal from the country.
In March, Spain’s government announced plans to give gig workers more employment rights. Spain was the first EU country to do so after a landmark legal ruling.
Known as the “rider law”, the changes will mean a worker is presumed to be an employee rather than self-employed. They will also force food digital platforms to inform delivery riders about how computer algorithms and artificial intelligence affect their working conditions.
Deliveroo said its withdrawal from Spain was subject to a month-long consultation starting in September. Services will halt in Spain in October.
The firm’s Spanish sales contribute less than 2% to their overall figures. Deliveroo operates in 12 markets but the UK and Ireland account for half of its revenues.
Although the company did not explicitly mention the government changes, the Spanish reforms have been seen as a direct challenge to the business models of companies such as Deliveroo. These companies rely on workers who are classified as independent contractors.