Delivery Hero reorganises business

Food delivery company Delivery Hero has said that it is to reorganise its food delivery business by closing down its logistics platform, Valk Fleet, and focusing all delivery related operations at an on-demand food service for top restaurants, foodora.

The logistics company Valk Fleet employs 200 staff in Germany and the UK, as well as over 1000 drivers. The drivers are ‘contractors’.

In a statement, Delivery Hero said that “the number of employees changing from Valk Fleet to foodora is currently unknown”.

The decision was based on Delivery Hero’s experience in operating two different delivery units as well as its minority investment in Food Express. This led the company to believe that “merging all delivery operations at foodora is the consistent step for a sustainable solution for a segment that is notorious for its low margins”.

Commenting on the decision, Niklas Östberg, CEO of Delivery Hero, said: “We have made some tough learnings when it comes to food logistics. Despite having built, possibly, the most advanced logistic tools in the industry, we have come to realize how concentrated the approach needs to be. We have therefore decided to focus all our logistics efforts to foodora. After having taken a couple of tough decisions lately, we now feel our operational structure is set to combine exceptional growth with profitability.”

In February, Delivery Hero processed more than 13 million orders, double the amount of deliveries that it did in the same period in 2015. This illustrates just how tough the meal delivery market has become in an increasingly competitive and cutthroat market. There is also pressure for startups to start making a profit in this sector.

Yesterday was not a good day for the sector – not only did Delivery Hero call time on Valk Street, but San Francisco-base SpoonRocket announced that it was shut down its service.