Delivery Hero shrank Foodpanda Germany six months after launching it

Reuters reported via Euronews on 22 December 2021 that Delivery Hero would scale down its Foodpanda operations in Germany and sell the subsidiary's Japan unit, citing increased competition and labour shortages. Foodpanda would exit Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart — though it had introduced the brand in Cologne, Düsseldorf and Stuttgart only a month earlier as part of a broader expansion programme in Germany.

Chief executive Niklas Östberg said: '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.' The retreat came barely six months after Foodpanda's June 2021 soft launch in Berlin — the group's return to its home market, which it had sold to Takeaway.com, now Just Eat Takeaway, for $1.1 billion in late 2018. Reuters noted the delivery market was expected to consolidate as the pandemic boom wore off, and that the EU had just proposed draft rules giving riders employee benefits.

The group also said it would exit Japan, which it had entered in September 2020, in the first quarter of 2022 to focus on growth in other markets and niches, especially quick commerce. Delivery Hero shares were up 6.4% by 0930 GMT on the day of the announcement.

Foodpanda exited Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart, and Delivery Hero pulled out of Japan after entering in September 2020.

Uber Eats, Just Eat Takeaway and Deliveroo were entrenched in the same cities while labour shortages raised the cost of fighting them.

The European Commission's December draft rules on rider employee benefits threatened to raise costs across the sector.

Three of the six exited cities had launched only a month earlier, showing how quickly the homecoming bet soured.

Launching three cities a month before abandoning them means the market test was never really run. Expansion bets need kill criteria set before launch, not discovered after payroll doubles.

The Japan exit was set for the first quarter of 2022, and Delivery Hero shares rose 6.4% on announcement day — investors rewarded the retreat. The German cities were left to the incumbents as Reuters expected the pandemic-era delivery market to consolidate.