Economist analyzes reasons for Deliveroo's exit from Hong Kong market

10-03-2025 19:03 HKT

Simon Lee Siu-po, an academic from the Chinese University of Hong Kong, has identified three primary factors contributing to the online food delivery platform Deliveroo's decision to exit the Hong Kong market. These factors include the highly competitive small market, the lingering effects of the Covid-19 pandemic, and a trend of consumers spending more on the mainland.

Deliveroo announced on Monday that it would cease operations in Hong Kong after nine years of service. The platform will continue to operate until April 7.

In a press release, the British company revealed that it would be exiting the Hong Kong market by selling certain assets to Foodpanda, a local competitor, and closing other assets.

Lee explained that, similar to other companies like Alipay and WeChat Pay, Keeta spent heavily on promotions to attract customers. He noted that with several substitutes available in the online delivery market, maintaining three major services was unsustainable. This assessment likely led Deliveroo to conclude that the costs outweighed the benefits, prompting their exit.

The economist further mentioned that the sale of assets to Foodpanda would enable better competition with Keeta, another market player, as the market could sustain two major services but not three.

Lee also raised concerns about the potential decline in service quality if only one provider remained. He highlighted that the Hong Kong market is continuously shrinking, making the future coexistence of these services uncertain.

Additionally, Lee pointed out a post-pandemic trend of Hong Kong residents traveling to the mainland for shopping and even bringing back deliveries. This behavior, along with the popularity of budget meal options like two-dish rice, has further challenged the viability of online food delivery platforms in Hong Kong.