Meal delivery service Foodora Inc. is planning to shut down its Canadian operations in mid-May, blaming a “highly saturated” field of food couriers that made it tough to turn a profit, but labour leaders see the closure as a way to thwart an ongoing union drive.
Foodora’s demise in Canada, announced Monday, comes at a time when restaurants are more dependent than ever on takeout and delivery. But Foodora, owned by Berlin-based multinational Delivery Hero SE, said it was unable to keep operating “without having to continually absorb losses.”
Foodora has also been facing a union push among its couriers, who voted last summer on whether to join the Canadian Union of Postal Workers (CUPW). The results of that vote have been sealed for months pending challenges on voter eligibility.
CUPW said its leaders were reviewing their legal options after being “shocked” by Foodora’s decision.
“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 (Canadian Emergency Relief Benefit),” Jan Simpson, CUPW’s national president, said.
In late February, CUPW won a key decision from the Ontario Labour Relations Board, which said Foodora couriers had the right to unionize after finding they “more closely resemble employees than independent contractors.”
Foodora did not immediately respond to questions. In the closure announcement Monday, the company said its top priority was supporting employees, couriers and restaurant clients.
“It’s really difficult not to see this closure as union busting,” said Ontario Federation of Labour president Patty Coates. “Their decision now, while we’re in the midst of this COVID-19 emergency, really demonstrates a complete disregard for the well-being of workers.”
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But in a statement on Tuesday afternoon, Foodora denied the union push had anything to do with its decision.
“We are not leaving the Canadian market because of the ongoing legal dispute with CUPW,” the company said in an email to the Financial Post. “Market conditions in Canada, and our current position in that market, are the reasons why we have made the decision to wind down our operation. Our business requires great scale to succeed, and unless you can get there, it’s unlikely to become profitable and attractive to users.”
Foodora started operating in Canada roughly five years ago, when it purchased Canadian delivery service Hurrier. In 2016, Hurrier was rebranded to Delivery Hero’s global Foodora banner.
The service is currently offered by more than 3,000 restaurants in 10 Canadian cities. The Canadian operations will officially close on May 11, according to Monday’s statement.