Delivery Hero SE, the Germany-based local delivery platform, has announced plans to scale down its German operations, foodpanda Germany, to a Berlin-based hub focused on developing innovative logistics and tech solutions for the delivery industry, and to divest its Japanese entity which also operates under the brand foodpanda.

Delivery Hero said in a statement that foodpanda Germany will exit six German cities including Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart, while an innovation hub will remain in central Berlin and concentrate on piloting new product features and technologies.

It also plans to divest foodpanda Japan in the first quarter of 2022.

Delivery Hero said these decisions allow the company to shift its resources to highly attractive growth opportunities in other markets and new verticals, especially in quick commerce, that are expected to generate more value for the ecosystem and shareholders.

“Scaling down our operations in Germany and planning to divest our Japanese business have not been easy decisions. Facing a very different reality now than we did entering these markets, it is with a heavy heart that we need to pursue other growth opportunities with larger potential,” said Niklas Östberg, Chief Executive Officer and Co-Founder of Delivery Hero.

“Despite having built up two fantastic foodpanda teams showing great progress, it has become increasingly difficult to create true value for our ecosystem in these countries. 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,” he said.

Foodpanda was launched in Germany this summer to bring Delivery Hero’s product closer to employees working in the Berlin headquarters. Following a successful pilot phase in Berlin, operations expanded quickly to additional cities.

However, since launching the service, the landscape of the German market changed significantly. External factors, such as an increased number of players and a shortage of riders, provided a new reality towards the end of the year.

At the same time, plenty of other growth opportunities were identified with a better expected return on investment, like other markets and new verticals, primarily in the area of quick commerce. Delivery Hero has therefore taken the conscious decision to pivot the scope of foodpanda Germany, scaling down operations in all cities but central Berlin.

As of the first quarter of 2022, foodpanda Germany will continue to ensure that Delivery Hero’s employees in the Berlin headquarters can experience the product and technologies that they build. The team will provide crucial insights on the company’s service, test new features and drive innovation for the whole delivery industry.

According to the statemenet, all affected employees, riders, pickers, customers and partners have been informed about the upcoming change. The company said it will do its best to transition employees from foodpanda Germany to positions within the Delivery Hero Group, or with partners from the company’s industry network. Employees who do not stay within the Delivery Hero Group will receive a severance package.

A very similar situation has also evolved in Japan, a market Delivery Hero entered in September 2020. In order to focus on other growth priorities within the group, the company plans to divest its Japanese entity and the divestiture process will be kicked off in the first quarter of 2022.

Delivery Hero is the world’s leading local delivery platform, operating its service in around 50 countries across Asia, Europe, Latin America, the Middle East and North Africa.

The company started as a food delivery service in 2011 and today runs its own delivery platform on four continents. Additionally, Delivery Hero is pioneering quick commerce, the next generation of e-commerce, aiming to bring groceries and household goods to customers in under one hour and often in 10 to 15 minutes.

Headquartered in Berlin, Germany, Delivery Hero is listed on the Frankfurt stock exchange since 2017, and became part of the leading index DAX (Deutscher Aktienindex) in 2020.

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