June 24, 2024

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A courier for Foodpanda, a meal-delivery service operated by Delivery Hero AG, checks his smartphone while sitting on a motorcycle at the company’s operations center in Bangkok, Thailand, on Friday, March 16, 2018. Bangkok’s famed love affair with food is spilling over to meal-delivery apps, a fledgling sector that Foodpanda projects will surge in 2018 as competition intensifies. Photographer: Brent Lewin/Bloomberg via Getty Images

Brent Lewin | Bloomberg | Getty Images

Singapore-headquartered food delivery service Foodpanda on Friday confirmed to CNBC that it is conducting its latest round of layoffs as the need to be “more agile remains critical.”

“Our company priority right now is to become leaner, more efficient and even more agile. To do this, we need to streamline our operations so we can take on a more structured approach for the coming days,” Jakob Sebastian Angele, APAC CEO of Foodpanda, said in a letter shared with employees seen by CNBC.

He did not mention the number of employees impacted nor departments affected.

This is Foodpanda’s third round of layoffs since job cuts in February and September last year amid macroeconomic headwinds, according to media reports. Grab and Deliveroo have also reduced headcount this year.

“While we already implemented some measures earlier this year, there is more we have to do to create the right set-up for our operations,” said Angele.

Those measures include reviewing organizational structure across both regional and country teams as well as shifting some functional reporting lines into different leaders for more consistency and focus, said Angele.

The layoffs come as Foodpanda parent Delivery Hero is in preliminary discussions with potential buyers to sell part of its Southeast Asian food delivery business, the Berlin-based company confirmed with CNBC on Friday.

On Wednesday, German media outlet WirtschaftsWoche reported that Delivery Hero is selling its operations under the Foodpanda brand in Singapore, Cambodia, Malaysia, Myanmar, Philippines, Thailand and Laos.

“Delivery Hero confirms negotiations with several parties regarding a potential sale of its foodpanda business in selected Southeast Asia markets. Any discussions or plans are in their preliminary stages,” the firm told CNBC in an email, without mentioning specific markets.

The German media report also said that competitor Grab could be a buyer. When CNBC reached out, Grab declined to comment on the matter.

“Grab’s competitors whether Gojek or Foodpanda are losing market share. Grab is gaining market share in deliveries from Foodpanda who might even exit few markets in due course. Foodpanda is dis-advantaged due to its stand-alone delivery model,” said Sachin Mittal, head of telecom, media and technology research at DBS Bank, in a Sept. 21 note.

Grab is the leader in Southeast Asia’s food delivery market, holding 54% of the region’s gross merchandize value in 2022, while Foodpanda captured 19% and Gojek held 12%, according to a report from tech research firm Momentum Works.

Tough operating environment

Food delivery players are trying to stay afloat amid economic headwinds. Grab slashed costs in the past few quarters as the firm focused on profitability. Delivery Hero previously said that its “focus remains on our long term commitment to building a sustainable, profitable business.”

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Delivery Hero has yet to become profitable since its inception in 2011. For the first half of 2023, Delivery Hero reported a net loss of 832.3 million euros ($886.9 million), compared with a loss of 1.495 billion euros a year prior.

Jonathan Woo, senior research analyst at Phillip Securities Research, said that Foodpanda potentially selling Southeast Asia businesses is “typical market consolidation after intense competition, especially as scrutiny over profitability intensifies.”

“Only a few market players — Grab, GoTo — in Southeast Asia could buy out Foodpanda,” said Woo, adding that such an acquisition would be “most appealing to Grab” which is more entrenched in the region compared to GoTo or Deliveroo.

GoTo is the combined company following a merger between Indonesia’s Gojek, which operates ride-hailing and food delivery businesses, and e-commerce giant Tokopedia.

In December 2021, Foodpanda announced it would scale down operations in Germany and exit the Japan market. Both Foodpanda and Grab have expanded to dine-in services as consumers resume their daily routines and go out and dine in more frequently.

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