The delivery company said increased competition and a shortage of labour has made it ‘increasingly difficult’ to get true value from these operations.
Delivery Hero has announced plans to scale down its Foodpanda operations in Germany and divest Foodpanda Japan in order to focus on new market opportunities.
The food delivery company said Foodpanda Germany will exit the six cities it recently entered and become a Berlin-based hub focused on developing logistics and tech tools for the delivery industry.
Foodpanda Germany was launched earlier this year, but external factors such as increased competition and a shortage of riders have created a “new reality” for the company. Its main competitor in this market is Just Eat Takeaway.com.
Delivery Hero said a similar situation occurred in Japan, a market the company entered in September 2020. It plans to divest Foodpanda Japan early next year.
Delivery Hero CEO Niklas Östberg said these were not easy choices to make, but it has become increasingly difficult to create “true value for our ecosystem in these countries” and the company needs to “pursue other growth opportunities with larger potential”.
“I have nothing but gratitude and admiration for the accomplishments both teams have achieved in the last months. Seeing the amazing service they built from scratch makes me genuinely proud and we will do everything we can to support our fellow heroes on their journey ahead.”
In Germany, we will focus on an innovation hub in central Berlin, which will allow us to pilot innovation close to our headquarters. I am so grateful for the dedication of the foodpanda teams, and we’re now doing our utmost to support them through this change. #DeliveryHero
— Niklas Oestberg 🥙🛒🚴♀️ (@niklasoestberg) December 22, 2021
The company added that these decisions will allow it to shift resources to growth opportunities in other markets and new verticals, especially in quick commerce. Earlier this year SiliconRepublic.com spoke to Delivery Hero CTO Christian Hardenberg about the growth of this part of the delivery sector.
Delivery Hero said it will do its best to transition employees from Foodpanda Germany to other positions within the company or with partners from its industry network, while those who do not stay within the Delivery Hero Group will receive a severance package.
Founded in 2011, Delivery Hero now operates food delivery services in more than 50 countries. It led a $1bn funding round for grocery start-up Gorillas in October and took a 5.09pc stake in delivery rival Deliveroo in August.
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