The logo of German food delivery service Delivery Hero.
Sean Gallup | Getty Images
Delivery Hero is winding down its food delivery operations in Germany, just four months after officially relaunching its services in the country.
The Berlin-headquartered food delivery firm’s Foodpanda unit will exit six German cities including Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart, according to a press release Wednesday.
Delivery Hero will instead focus on an innovation hub in central Berlin to pilot new product features and technologies. The company also plans to sell its Japanese unit Foodpanda Japan in the first quarter of 2021.
“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, Delivery Hero’s CEO and co-founder.
“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.”
Delivery Hero didn’t rule out job losses. The company said it would try to move Foodpanda employees to other roles within the group company. Staff who do not stay with the company will receive a severance package.
Shares of Delivery Hero climbed 6% Wednesday morning, making 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, which has a sizable presence in Germany.
Takeaway.com, a subsidiary of Just Eat Takeaway, acquired Delivery Hero’s Germany business in 2018. That made life harder for the competition, with Deliveroo withdrawing from the German market in 2019.
In May, Delivery Hero announced plans to re-enter Germany under its Foodpanda brand, with operations officially commencing in August. The company’s short-lived return highlights the struggle to carve out significant market share in the highly localized food delivery business.
Online takeout platforms have benefited from surging demand amid the coronavirus pandemic. Competition is intense, with Delivery Hero, Just Eat, Deliveroo and Uber are all jostling for dominance in Europe.
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.