(Bloomberg) — Deliveroo Plc will close its Hong Kong business after weak sales and mounting competition in the city weighed on the company’s international division.
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The London-based delivery company will sell some assets to rival Foodpanda, owned by Delivery Hero SE, and close other assets, it said in a statement on Monday.
Delivery Hero shares climbed by as much as 3.4%. Deliveroo shares rose 1% to 126.4 pence.
Deliveroo has faced stiff competition and price wars in Hong Kong from Foodpanda and KeeTa, a subsidiary of Chinese food delivery giant Meituan. Success in China has let Meituan expand aggressively, with growing operations across Asia and the Middle East. It typically enters markets with low prices and steep discounts, a strategy it can keep thanks to a soaring share price.
KeeTa, which launched in Hong Kong in May 2023, quickly took market share from Deliveroo through heavy promotions. In January, Deliveroo’s Chief Executive Officer Will Shu ruled out running “endless promotions” to compete in the city.
The company said the decision to close the unit, which represented 5% of gross transaction value, is linked to its commitment to “disciplined capital allocation,” according to the statement. Slow growth in the market dragged all gross sales outside of the UK and Ireland down five percentage points, the company added.
The Deliveroo app will remain active in Hong Kong until April 7.
The company’s exit comes amid a wave of consolidation in the food delivery industry, which has struggled to return to pandemic-era growth.
In February, Prosus NV agreed to buy Just Eat Takeaway.com for €4.1 billion ($4.4 billion). Delivery Hero attempted to sell its Foodpanda operations in Taiwan to Uber but the sale was blocked by local regulators last year.
(Updates with share prices and additional market context in third and seventh paragraphs. A previous version of this story corrected when KeeTa launched.)
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