December 23, 2021: Delivery Hero is winding down its food delivery operations in Germany just four months after relaunching its services in the country.
The Berlin-headquartered food delivery firm’s Foodpanda unit will exit six German cities, which include Cologne, Düsseldorf, Frankfurt, Hamburg, Munich, and Stuttgart press release on Wednesday.
Delivery Hero will focus on an innovation hub in central Berlin to pilot new product features and technologies. The company is also planning to sell its Japanese unit Foodpanda Japan in the quarter of 2021.
“Facing a very different reality than we did entering these markets, it is with a heavy heart that we need to pursue different growth opportunities with huge potential,” said Niklas Östberg, Delivery Hero’s CEO and co-founder.
“Despite having built up two fantastic Foodpanda teams that show great progress, it has become difficult to create true value for our ecosystem in these countries.”
Delivery Hero didn’t rule out job losses. The company says that it would try to move Foodpanda employees to different roles within the group company. Staff who do not stay with the company will receive a severance package.
Shares of Delivery Hero is climbing 6% on Wednesday morning, which makes it the biggest gainer in the pan-European Stoxx 600 index. Just Eat Takeaway, Delivery Hero’s main rival in Europe, was the second-best performing stock, up 4%.
The move marks a big win for Just Eat Takeaway, a sizable presence in Germany.
Takeaway.com, a subsidiary of Just Eat Takeaway, acquired Delivery Hero’s Germany business in 2018. That made life much difficult for the competition, with Deliveroo withdrawing from the German market in 2019.
Delivery Hero announced plans to enter Germany under its Foodpanda brand in May, with operations officially commencing in August. The company’s short-lived return highlights the struggle to carve out huge market share in the highly localized food delivery business.
Online takeout platforms have benefited from increasing demand amid the coronavirus pandemic. Competition is intense, with Delivery Hero, Eat, Deliveroo, and Uber jostling for dominance in Europe.
Food delivery companies face a new threat in the increase of rapid grocery delivery services like Getir and Gorillas. Like platforms offer 10-minute shipment of essential items from “dark stores,” delivery-only facilities that don’t serve customers in person.
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