German grocery app Gorillas to cut profit-seeking staff

Frankfurt: Gorillas will lay off 300 people, halving its administrative staff, as the German grocery delivery app transitions 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 been unprofitable amid uncertain economic times.

“Risk has become irritating for investors, and no one wants uncertainty right now, so it’s quite difficult to raise funds right now,” Sumer told Reuters in an interview. “When we go public, we want to do so as a profitable business.”

The fast grocery delivery model comes with high costs, as businesses must pay thousands of drivers and logistics centers across cities to quickly deliver chips, milk, pasta and other items to customers. .

“That’s why fixed costs need to come down and the Berlin headquarters needs to become the hub,” Sumer said, adding that the company was only laying off administrative staff and its 14,000 bicycle delivery workers would not be affected.

He said Gorillas aims to focus on Germany, France, Britain, the Netherlands and the United States, which account for 90% of the startup’s business, and is looking at options for its small operations in Italy, Spain, Denmark and Belgium.

Gorillas, whose investors include online takeaway company Delivery Hero, had in the past sought to expand into more countries in hopes the business model would grow as much as delivering meals in lockdowns. COVID-19.

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

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