Foodpanda, the Singapore-based food delivery service, is undergoing a round of layoffs as part of its efforts to become more agile and efficient, according to statements from the company. The move comes amid the challenges faced by the food delivery industry, with competitors Grab and Deliveroo also reducing their workforce this year.
Jakob Sebastian Angele, APAC CEO of Foodpanda, emphasized the need for streamlining operations to adopt a more structured approach in the coming days. While specific numbers were not disclosed, this marks Foodpanda’s third round of layoffs, following job cuts in February and September of the previous year due to macroeconomic challenges.
To achieve operational efficiency, Foodpanda is reviewing its organizational structure across regional and country teams. Additionally, some functional reporting lines will be shifted to different leaders to enhance consistency and focus within the company.
These layoffs coincide with reports that Foodpanda’s parent company, Delivery Hero, is in preliminary discussions with potential buyers regarding the sale of part of its Southeast Asian food delivery business. Although specific markets were not mentioned, reports suggest that the sale could involve regions such as Singapore, Cambodia, Malaysia, Myanmar, the Philippines, Thailand, and Laos.
Competitor Grab has been identified as a potential buyer, but neither company has officially commented on the matter. Foodpanda has been experiencing a decline in market share compared to Grab, which holds 54% of Southeast Asia’s food delivery market in 2022, while Foodpanda captured 19% and Gojek held 12%.
The food delivery industry is navigating a challenging operating environment, with Grab focusing on cost reduction and Delivery Hero aiming for long-term profitability. Foodpanda’s potential sale of its Southeast Asia businesses is seen as market consolidation following intense competition and growing scrutiny over profitability. Analysts suggest that Grab, with a strong presence in the region, may find such an acquisition most appealing.
Both Foodpanda and Grab have expanded into dine-in services as consumer habits shift back to more frequent dining out, with Foodpanda previously announcing the scaling down of operations in Germany and its exit from the Japanese market in December 2021.
Industry Consolidation and Challenges Amid Competition
The food delivery industry is witnessing a period of consolidation as major players seek to optimize their operations and achieve profitability. The layoffs at Foodpanda, Grab’s potential acquisition of parts of Foodpanda’s business, and the ongoing focus on cost reduction by various companies illustrate the challenges faced by players in this highly competitive sector.
Delivery Hero’s reported net loss in the first half of 2023 highlights the financial pressures in the industry, despite its continuous efforts to build a sustainable and profitable business since its inception in 2011.
Analysts suggest that as scrutiny over profitability intensifies, only a few key players like Grab and GoTo (a merger of Indonesia’s Gojek and e-commerce giant Tokopedia) may have the resources and market presence to consider acquiring businesses from competitors.
In this dynamic landscape, companies are exploring various strategies, including diversifying into dine-in services, to adapt to changing consumer preferences and maintain their position in the market. The ongoing shifts and strategic moves within the industry highlight the need for flexibility and efficiency to thrive in this highly competitive space.
