Deliveroo Abandons Hong Kong Market—Here's Why It's Betting Big On The UK Instead

British food delivery giant Deliveroo has announced its surprise exit from Hong Kong, ending nearly a decade of operations in the region. The company confirmed it will cease all business by 7 April, citing intensifying competition and a strategic shift towards more profitable markets such as the United Kingdom and Ireland.

Despite a strong revenue boost in 2024, Deliveroo has struggled to maintain its position in Hong Kong's crowded food delivery sector, ultimately leading to this decision.

Deliveroo Bows to Market Pressure

In a formal disclosure, Deliveroo stated that continuing operations in Hong Kong was no longer financially viable.

'There are several dynamics specific to the Hong Kong market which led the Board to consider strategic options and, given the Group's commitment to disciplined capital allocation, determine that it would not serve shareholders' best interests to continue to operate in Hong Kong,' the company stated in its Q4 2024 trading update.

To manage the closure, Deliveroo has appointed liquidators and is selling part of its assets to Foodpanda, a major competitor in Hong Kong, while the rest will be shut down permanently.

'We want to thank all our employees, consumers, riders and restaurant and grocery partners who have been involved in our operations in Hong Kong. We have been proud to serve so many people such amazing food over the past nine years,' said Eric French, Deliveroo's Chief Operating Officer.

The company also revealed that Hong Kong accounted for just 5% of Deliveroo's total Gross Transaction Value (GTV) in 2024, and its underperformance negatively impacted international GTV growth by five percentage points.

Deliveroo's Q4 2024 Financial Performance

Deliveroo's latest financial results show that GTV grew by 6% year-on-year, remaining within the expected 5-9% range. Its adjusted EBITDA is projected to hit the upper end of its £110-130 million guidance, alongside a positive free cash flow.

Regional performance highlights include:

• UK & Ireland (UKI): GTV rose by 9% in Q4, with orders up 5%, driven by improved customer retention and frequency.
• International Markets: GTV increased by 5%, with strong growth in the UAE and Italy, as well as slight improvements in France.
• Excluding Hong Kong, international GTV surged 10%, with a 6% rise in orders—indicating that the region significantly dragged down overall growth.

Despite an increase in revenue, the company's revenue take rate fell by 40 basis points year-on-year, reflecting planned investments to enhance customer value.

The Rise of Local Competitors

Deliveroo's struggles in Hong Kong's highly competitive market are largely due to the rise of rival platforms such as Foodpanda (owned by Delivery Hero) and KeeTa, which is backed by Chinese tech giant Meituan.

According to Statista, Foodpanda currently dominates Hong Kong's food delivery market, while KeeTa—despite launching only in 2023—has quickly gained traction.

KeeTa outsmarted its competitors with aggressive promotions and heavy investments in marketing, a strategy that has been highly effective in capturing market share. Simon Lee Siu-po, an academic from the Chinese University of Hong Kong, told The Standard that KeeTa's approach mirrors the success of WeChat and Alipay+, which also used deep discounts to dominate their respective industries.

Lee further explained that Hong Kong's food delivery market is oversaturated, making it financially unfeasible for three dominant platforms to co-exist. Given these conditions, Deliveroo's withdrawal signals that operating costs outweighed long-term benefits.

What's Next for Deliveroo?

Deliveroo's exit from Hong Kong reflects a shift in its business strategy, focusing on profitability and sustainable growth. With strong order growth and customer retention in the UK and Ireland, the company is doubling down on its most profitable markets.

By refining its consumer value proposition and expanding key services, Deliveroo aims to strengthen its market leadership in the UK and Ireland and drive long-term financial success.

While its Hong Kong chapter is coming to a close, Deliveroo remains committed to scaling its operations in key markets and adapting to changing industry trends.