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Foodpanda In Talks To Sell A Portion Of Its Asian Meal Delivery Company And Implement Layoffs

Foodpanda In Talks To Sell A Portion Of Its Asian Meal Delivery Company And Implement Layoffs
Foodpanda, a Singapore-based food delivery service, announced to the media on Friday that it is carrying out its most recent round of layoffs because 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 on Thursday in a letter shared with employees and seen by the media
He made no mention of the number of affected personnel or departments.
According to media reports, this is Foodpanda's third round of layoffs since job cuts in February and September of last year amid financial headwinds. This year, headcounts were also decreased at Grab and Deliveroo.
“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.
For greater consistency and concentration, these initiatives include revising organisational structure between regional and national teams as well as moving some functional reporting lines under other leaders, according to Angele.
The layoffs take place while Berlin-based Delivery Hero, the parent company of Foodpanda, is in exploratory talks with prospective purchasers to sell a portion of its Southeast Asian food delivery business.
German news outlet WirtschaftsWoche reported on Wednesday that Delivery Hero is selling its businesses in Singapore, Cambodia, Malaysia, Myanmar, the Philippines, Thailand, and Laos under the Foodpanda brand.
“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.
Additionally, rival Grab was mentioned in the German media article as a potential acquirer.
There were no comments on the matter from Grab.  
“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.
According to an estimate by tech research company Momentum Works, Grab would hold 54% of Southeast Asia's gross merchandise value in 2022, followed by Foodpanda with 19% and Gojek with 12%.
Players in the food delivery industry are battling economic difficulties to stay afloat. Grab cut expenses in the most recent quarters as the company concentrated on profitability. According to a recent statement made by Delivery Hero, the company's "focus remains on our long-term commitment to building a sustainable, profitable business."
Since its launch in 2011, Delivery Hero has not yet achieved financial success. Delivery Hero recorded a net loss of 832.3 million euros ($886.9 million) for the first half of 2023 as opposed to a loss of 1.495 billion euros the year before.
According to Jonathan Woo, senior research analyst at Phillip Securities Research, the probable sale of Foodpanda's Southeast Asian operations 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.
Gojek, an Indonesian company that runs ride-hailing and food delivery services, and Tokopedia, a massive online retailer, merged to form GoTo.
Foodpanda declared in December 2021 that it will discontinue operations in Japan and reduce its presence in Germany. As consumers return to their daily routines and eat out more frequently, Foodpanda and Grab have both added dine-in services.

Christopher J. Mitchell

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