Investors Sour On Postmates, Triggering Layoffs

Food-delivery startup Postmates has laid off dozens of employees and shuttered its Mexico City office, CNBC reported on Tuesday (Dec. 3), citing sources.

Postmates, which has about 1,300 employees, started laying off dozens of people this week, and not just in Mexico City, sources told CNBC. Employees were axed from the company’s headquarters in San Francisco as well as from Los Angeles, Nashville, Tennessee, and other offices.

“We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the U.S.,” a Postmates spokesperson said in an email to CNBC. “We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result.”

Documents reviewed by CNBC indicated that the layoff plan was code-named “Project 710,” a number that “signifies closures and new beginnings.” One source added that Postmates, which competes with Uber, DoorDash and GrubHub, is shopping around for a buyer.

Postmates had been hoping to go public this year and confidentially filed paperwork for an initial public offering (IPO). The company even raised $225 million in September, which was considered a bridge round leading up to an IPO. But the spotlight on the financial hardships of Uber and Lyft, combined with WeWork’s botched IPO and mismanagement, has turned the tide as investors lose money.

Postmates co-founder and CEO Bastian Lehmann said last month that Grubhub’s dismal earnings report and one-day 43 percent stock plunge was not an indicator of the food delivery market. Grubhub has reportedly lost over half of its market value this year.

Lehmann said that it is on firms to set themselves apart from one another as rivals like DoorDash, Uber Eats and Seamless pack into the busy food delivery space.

“The right way to think about the space is not a winner-take-all market,” Lehmann said. “You will have different brands in the space that appeal to very different customer bases, based on the merchants that they provide access to.”

Postmates recently partnered with Walgreens to provide on-demand delivery in New York City.