Delivery Hero to shrink Foodpanda Germany, sell Foodpanda Japan

Advertisements promoting delivery services in Berlin
Cyclists drive past an advertisement promoting the grocery delivery company "foodpanda", in Berlin, Germany, August 13, 2021. Picture taken August 13, 2021. REUTERS/Christian Mang

BERLIN, Dec 22 (Reuters) - German food delivery group Delivery Hero (DHER.DE) said on Wednesday it would scale down its Foodpanda operations in Germany and sell the subsidiary's Japan unit, citing increased competition and labour shortages.

Delivery Hero said Foodpanda would exit Cologne, Duesseldorf, Frankfurt, Hamburg, Munich and Stuttgart, though it had only introduced the brand in Cologne, Duesseldorf and Stuttgart a month earlier as part of a broader expansion programme in Germany.

"Facing a very different reality now than we did entering these markets, it is with a heavy heart that we need to pursue other growth opportunities with larger potential," Chief Executive Niklas Oestberg said in a statement.

The meal delivery market, with players including Uber Eats (UBER.N), Just Eat Takeaway (TKWY.AS) and Deliveroo (ROO.L), is expected to consolidate as the pandemic-related boom starts to wear off and companies look to adjust operations. read more

At the same time, the European Commission announced draft rules in early December to give employee benefits to riders and drivers for online delivery firms, a move some companies argue will lead to job losses. read more

Delivery Hero shares were up 6.4% by 0930 GMT.

Delivery Hero, whose operations span more than 50 countries, only started in June with the soft launch of its Foodpanda brand in Berlin and then rolled it out to other cities in August.

That return home brought an abrupt end to a truce struck in late 2018, when Oestberg sold Delivery Hero's German operations to - its Dutch competitor now known as Just Eat Takeaway (JET) - for $1.1 billion.

The group also said on Wednesday it would exit the market in Japan, which it entered in September 2020, in the first quarter of 2022 to focus on growth in other markets and niches, especially in the area of quick commerce.

Reporting by Zuzanna Szymanska Editing by Paul Carrel and Mark Potter

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