Delivery Hero is winding down its food delivery operations in Germany, just four months after officially relaunching its services in the country.
According to a press announcement issued Wednesday, the Berlin-based food delivery company's Food panda branch would leave six German cities: Cologne, Düsseldorf, Frankfurt, Hamburg, Munich, and Stuttgart.
Instead, Delivery Hero will focus on a central Berlin innovation hub where new product features and technologies will be tested.
Foodpanda Japan, the company's Japanese subsidiary, will be sold in the first quarter of 2021.
"With a completely different reality now than when we first entered these regions, it is with a heavy heart that we must seek other growth prospects with greater promise," stated Niklas Stenberg, CEO and co-founder of Delivery Hero.
"Despite having developed two amazing Foodpanda teams that are making great progress, creating meaningful value for our ecosystem in both nations has become increasingly tough."
Job losses aren't ruled out by Delivery Hero. The company stated that it would attempt to reassign Foodpanda staff to other positions within the group.
Employees who leave the company will be given severance compensation.
Delivery Hero's stock rose 6% in early trading on Wednesday, making it the largest gainer in the Stoxx 600 index. Just Eat Takeaway, Delivery Hero's main European competitor, was the second-best performer, up 4%.
Just Eat Takeaway, which has a substantial presence in Germany, will benefit greatly from the relocation.
In 2018, Takeaway.com, a subsidiary of Just Eat Takeaway, purchased Delivery Hero's German operations. Deliveroo exited the German market in 2019 as a result of this, making life difficult for the competition.
Food delivery companies face a new threat in the rise of rapid grocery delivery services such as Getir and Gorillas. Such platforms offer 10-minute shipment of essential items from so-called “dark stores,” delivery-only facilities that don’t serve customers in person.
Delivery Hero is making its own foray into “quick commerce” with a network of dark stores and has made a $235 million investment into Berlin grocery app Gorillas. Just Eat Takeaway, meanwhile, has struck grocery delivery partnerships with U.K. supermarket chains Asda and Tesco.
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