German Delivery Service Gorillas Cuts 300 Jobs

German grocery delivery app Gorillas will lay off 300 workers — a move that halves its administrative staff — as the company moves its focus from expansion to becoming profitable, its CEO said.

In an interview with Reuters Tuesday (May 24), Chief Executive Kagan Sumer said the company had tripled in size since October when it raised $921 million, but has not been profitable.

See also: Ultrafast Grocery Acquisitions Continue Amid Category’s Demand for Consolidation

“Risk has become irritating for investors, and nobody wants uncertainty right now. That makes it pretty hard to raise money right now,” Sumer said. “When we go public, we want to do it as a profitable company.”

Rapid grocery delivery services are high-cost businesses, Reuters noted, as the companies must pay for thousands of delivery workers and logistics centers to get products to consumers’ doorsteps quickly.

“That’s why fixed costs have to come down and the Berlin headquarters should become the hub,” Sumer said, adding that Gorillas’ job cuts would affect only administrative staff and not its 14,000 bicycle-bound deliverers.

He said Gorillas wants to focus on Germany, France, Britain, the Netherlands and the U.S., which make up 90% of the firm’s business, and it was reviewing options for smaller operations in Belgium, Denmark, Spain and Italy.

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Gorillas is not alone in its struggle. Last month, instant delivery platform Gopuff said it was trying to raise $1 billion in debt that could be turned into stock while also cutting drivers’ minimum pay in California.

That move followed two rounds of layoffs this year, including one in March when it laid off about 450 people, or 3% of its 15,000 workers. Also in March, Instacart cut its valuation from $39 billion to $24 billion. Firms like DoorDash, Grubhub and other delivery services have struggled to find traction as public companies.

Experts have said the industry could expect to see consolidation in its future.

“I think as ultrafast grocery begins to mature, we’ll see some shakeout,” James Walker, CEO of ultrafast delivery service Buyk, told PYMNTS in January. “Players that are very focused on the business model as well as the customer experience ultimately will be successful, and those that are not spending the requisite amount of time will not be as successful.”