German supermarket Gorillas app reduces the number of employees looking for profit

German supermarket Gorillas app reduces the number of employees looking for profit

FRANKFURT (Reuters) – Gorillas Chief Executive Officer Kagan Sommer said it will lay off 300 people and slash its executive staff in half, as the German grocery delivery app shifts its focus from rapid expansion to profit making.

Founded in 2020 in Berlin, the startup has tripled its turnover since October when it raised 860 million euros ($921 million), but has been unprofitable amid uncertain economic prospects.

“The risks are becoming annoying for investors and nobody wants the uncertainty right now. That makes it very difficult to raise money at the moment,” Sommer told Reuters in an interview. “When we go public, we want to do that as a profitable company.”

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The supermarket express delivery model comes at a high cost as companies have to pay thousands of passengers and logistics centers in cities to get potato chips, milk, pasta and other items to customers quickly.

“Therefore, fixed costs must be reduced and headquarters in Berlin must become the focus,” Sommer said, adding that the company had only laid off administrative staff and that 14,000 bicycle-related service providers would not be affected.

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

Gorillas, whose investors include online ready-to-eat food company Delivery Hero, has in the past sought to expand into more countries in the hope that its business model would grow as much as meal delivery amid COVID-19 lockdowns. Read more

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But competition has been fierce in major cities, such as Berlin, where competitors such as Flink, Doordash (DASH.N) Wolt and Getir offer similar services.

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(Nadine Shamroushek reports). Written by Susanna Szymanska; Editing by Rachel Moore and Edmund Blair

Our Standards: Thomson Reuters Trust Principles.

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