Foodpanda Layoffs Get the Go-Ahead as Business Considers Partial Sale

Key takeaways

• Foodpanda is conducting its third round of layoffs in 12 months
• Parent company Delivery Hero confirmed it’s selling Foodpanda in the coming months
• Delivery Hero’s share price rose as much as 13.5% at the news

Food delivery service Foodpanda is swinging the ax — again. The business confirmed it’s making layoffs as it’s considering a partial sale. The reason given was that the business needed to become leaner and more agile, which is code for “We’re struggling a bit right now”.

While a third round of layoffs in just under a year isn’t a great sign, investors were heartened at the prospect of a sale from parent company Delivery Hero. One likely contender could be waiting in the wings to snap up Foodpanda — let’s get into the details of what exactly is going on with the company right now.

What’s happening with Foodpanda layoffs?

Singapore-based food delivery company Foodpanda has confirmed it’s conducting another layoff round in a bid to streamline its operations.

It’s the third layoff round in 12 months, with Foodpanda having already fired employees in February and September last year. Jakob Sebastian Angele, APAC CEO of Foodpanda, confirmed the layoffs were part of an organizational restructuring, including moving reporting lines to create more consistency and focus in the business.

“Our company priority right now is to become leaner, more efficient and even more agile,” Angele said in a memo shared with employees.

But it’s not the only food delivery service to have made the same move. Grab and Deliveroo have also laid off workers this year in Singapore, with the former slashing 1,000 jobs and the latter cutting 25% of its headcount in the country.

What’s the news about Foodpanda’s sale?

Foodpanda’s parent company, Germany-based Delivery Hero, is said to be considering a partial sale of its Southeast Asian food delivery business. The deal would affect operations under the Foodpanda brand in Singapore, Cambodia, Malaysia, Myanmar, Philippines, Thailand and Laos.

Delivery Hero confirmed to CNBC the potential divestiture, saying, “Any discussions or plans are in their preliminary stages”. A German media report named Grab as a potential buyer, though there haven’t been any confirmations from the rival yet.

But the deal would make sense. Grab has a 54% market share in Southeast Asia compared to Foodpanda’s 19%. Grab has had to cut costs all over the business to stay afloat in the macroeconomic environment, while Delivery Hero hasn’t made a profit since its 2011 founding.

Delivery Hero’s share price rose by as much as 13.5% thanks to last week’s announcement. Grab saw a 2% boost to its stock on Wednesday but closed the trading day at a 0.29% loss.

The bottom line

A third round of layoffs in a year shows how the Southeast Asia food delivery sector is currently struggling. As for the merger rumors with Grab, market consolidation makes perfect sense at the moment given the struggles the food delivery sector is facing — though while the talks are still in the early stages, we don’t have anything substantial to go on.