Deliveroo Australia revealed that it was losing $3 million in cash a month.
👉 Background: It’s far to say that COVID lockdowns, delivery apps were living their best life. Deliveroo Australia's net revenue peaked at $14.9 million in August 2021.
👉 What happened: But sadly, in November this year, Deliveroo announced it was ending its operations in Australia. And now, Deliveroo Australia’s administrator, KordaMentha, has revealed that Deliveroo was losing $3 million in cash a month around the time of its demise.
👉 What else: On top of that, it owed $123 million in inter-company loans. So it's no surprise that its UK parent company withdrew its financial support for its subsidiary, Deliveroo Australia.
💡An overly reliant subsidiary can become a big problem for a battling parent company. When a subsidiary relies heavily on funding from their parent company, it creates major attachment issues.
💡It can limit the subsidiary's ability to make its own decisions and operate independently. On top of that, if the parent company runs into financial difficulties, it may not be able to provide the necessary funding to its subsidiaries.
💡And when these two factors combine with the infamously thin unit economics of the food delivery industry… it can get ugly.
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