German grocery app Gorillas to cut staff in search of profit

·2 min read
FILE PHOTO: Amsterdam and Rotterdam move to ban new "dark store" delivery hubs in the city centres

FRANKFURT (Reuters) - Gorillas will lay off 300 people, cutting its administrative staff in half, as the German grocery delivery app shifts focus from rapid expansion to turning a profit, Chief Executive Kagan Sumer said.

The Berlin-based startup, founded in 2020, has tripled the size of its business since October when it raised 860 million euros ($921 million) but it has not been profitable amid an uncertain economic outlook.

"Risk has become irritating for investors, and nobody wants uncertainty right now. That makes it pretty hard to raise money right now," Sumer told Reuters in an interview. "When we go public, we want to do it as a profitable company."

The model for rapid grocery deliveries comes with high costs as the companies have to pay for thousands of riders and logistic centres across cities to get crisps, milk, pasta and other items to customers swiftly.

"That's why fixed costs have to come down and the Berlin headquarters should become the hub," Sumer said, adding that the company was only laying off administrative staff and its 14,000 bicycle-bound deliverers would not be affected.

He said Gorillas aimed to focus on Germany, France, Britain, the Netherlands and the United States, which make up 90% of the startup's business, and it was reviewing options for its smaller operations in Italy, Spain, Denmark and Belgium.

Gorillas, whose investors include online takeaway food firm Delivery Hero, had in the past aimed to expand into more countries amid hopes the business model would grow as much as meal delivery did in COVID-19 lockdowns.

But competition has been fierce in major cities, such as Berlin, with rivals such as Flink, Doordash's Wolt and Getir offering similar services.

($1 = 0.9335 euros)

(Reporting by Nadine Schimroszik; Writing by Zuzanna Szymanska; Editing by Rachel More and Edmund Blair)

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