Lockdown smash Providoor enters liquidation with insufficient funds to pay creditors, refund customers

Restaurant meal delivery startup, Providoor, has been handed over to Liquidators three years after launching.

The business was founded in Melbourne by chef Shane Delia in the early months of the COVID-19 pandemic, as a way to help restaurants stay afloat during lockdowns.

Providoor allowed customers to order meals from restaurants that they would then finish at home. While initially launching in Melbourne, the service branched into Sydney, Canberra, Brisbane and some Northern NSW locations.

The service was popular not only with retail customers — particularly for special occasions — but also with businesses. During one of the lockdowns, I was involved in an at-home PR event that included meals being sent to attendees from Sydney’s Mjolner to enjoy over Zoom during the briefing.

Just 15 months ago the business boasted over $74 million in revenue for its restaurant partners since launching in 2020. But the landscape has changed since.

While Delia hasn’t publicly gone into specifics, the founder did cite the current economic climate when announcing the closure.

“When people kept using Providoor after social restrictions were lifted, it showed us that it was a really good idea. I just wish it had been given the opportunity to work through the challenging economic conditions, the same facing so many in the restaurant and hospitality sector right now.”

Delia also expressed pride over the business and what it achieved during lockdowns in particular.

“While today is a very sad day, I am proud of Providoor and what it has achieved. We served more than one million meals and built something that made a difference during some very dark days,” Delia said in a statement.

“I created Providoor during lockdown, when the hospitality world was in disarray and we needed to find a way to survive. Providoor meant we could secure and create jobs as well as give people a little bit of restaurant joy during a pretty dismal time.”

In a LinkedIn post, Providoor CEO Tim MacKinnon also revealed that the business was almost sold at one point.

“Yesterday was tough. A great idea, nurtured by a brilliant team, has finished mid-course. I’m gutted for our people, customers, restaurants and partners. Premium food at home is a huge opportunity, we just didn’t have the opportunity we thought we had to create it,” MacKinnon said.

“It felt like a decade of business lessons compressed into a couple of years, from raising capital to unit economics (positive) and order value(high), frequency (not high enough), hiring (best team), reducing burn, selling a business (almost, we had agreed terms), and liquidating (and returning capital).  It was never dull.”

Liquidators have bad news for gift card holders and pre-orders

It was also announced on Friday that Jonathon Colbran and Tristana Steedman from RSM Australia Partners have been appointed as Liquidators for Providoor.

According to a statement from RSM, the closure would impact around 16 full-time employees, as well as 50 restaurants across Sydney and Melbourne.

It also stated that it has started contacting stakeholders and creditors, and provided some information regarding pre-purchased meals and gift cards.

“This includes customers who had purchased gift cards or ordered and purchased meals for future dates who may also be creditors,’’ Colbran said in a statement.

“Based on our initial assessment of Providoor’s financial position, there is presently insufficient money to pay a dividend to creditors or provide refunds to customers, including gift card holders.

“We understand this will be very disappointing news, but we wanted to inform customers as soon as possible, particularly if they had purchased gifts or meals for upcoming special events.”

Colbran encouraged Providoor customers who had purchased gift cards or pre-purchased future meals using credit cards to immediately discuss their situation with their bank or financial institution to assess their options, as they may be eligible for a chargeback.

Grim time for food delivery services in Australia

Providoor’s closure is just the latest in a long string of collapses in the meal and grocery delivery space in recent months.

Last month ‘instant’ grocery delivery app Milkrun shuttered less than two years after launching. During that time it had raised over $86 million in venture capital and was pushing into car delivery in the weeks leading up to its closure.

It was the last of these types of grocery delivery services to fold, with rival Voly shutting up shop in November. Deliveroo also pulled out of Australia in the same month.

Voly has since been acquired by Our Cow and given new life as an online farmers’ market. Six months earlier another rival, Send, also went to the administrators.

And in recent weeks ready-meal and pantry delivery service, CoLab, went into voluntary administration. However, it was rescued by eFoodz last week.

All of this begs the question — what is happening with food and meal delivery services in Australia — because things aren’t looking good.

Has the boom passed as the world has opened up again? Are some of these businesses simply unable to operate without VC-shaped life support? Or is the current economic strains resulting in less spend on takeout, expensive meals and grocery delivery?

The answer possibly lies somewhere in between.