Delivery Hero exits Germany for second time, citing high costs

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Berlin-based delivery heroes will withdraw from the German market for the first time in three years due to rising rider costs and intensifying competition in the food delivery business in their home countries.

Germany’s most valuable publicly traded start-up, the 10-year-old company “shrinks the Foodpanda brand in Europe’s largest economy and sells its subsidiary in Japan to shift resources to highly attractive growth opportunities. In other markets. “

“Despite making great strides in building two great Foodpanda teams, it’s becoming increasingly difficult to create real value in our ecosystem in these countries,” said CEO. Niklas Ostberg said.

He said the company “is now facing a very different reality than it was when it entered these markets.”

Ostberg told the Frankfurter Allgemeinezeitung newspaper that delivery heroes could compete in Germany if they decided to invest more, but the funding was high and the company “doesn’t have infinite funding.”

Delivery Hero, which accounts for the majority of revenue in Asia, first withdrew from the German market in 2019. Sale of domestic business Just eat Takeaway.com. Other competitors such as Deliveroo soon left Germany.

However, in May, Delivery Hero announced that it would launch after Finnish rival Wolt launched in several German cities and Uber Eats announced that it would launch in the country. Rebuilding German operations..

Six months later, Foodpanda will leave the six German cities of Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart, leaving Berlin with very little service and acting as an “innovation hub”.

The German food delivery market is even more crowded, with DoorDash launched in Stuttgart last month. Numerous grocery delivery apps such as Gorillas, Flink, and Getir are also increasing the demand for riders, and businesses need to offer higher wages and incentives.

“It’s a market that will change for a lifetime in just a few months, given the impact of dark store operators,” said Jeffreys analyst.

Delivery Hero is increasingly focused on growing markets in Asia and the Middle East. After purchasing Dubai’s grocery app InstaShop in 2020, we completed the $ 4 billion acquisition of South Korea’s Woowa earlier this year.

The group is also hedging bets on many investments in rivals such as Gorrilas and Deliveroo.

Following news of Germany’s withdrawal, Delivery Hero’s share price rose 5% in Frankfurt on Wednesday, down almost 30% year-to-date.

The unprofitable company raised € 1.25 billion through the sale of convertible bonds in September to fund new investments.

Delivery Hero exits Germany for second time, citing high costs Source link Delivery Hero exits Germany for second time, citing high costs

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