Gorillas is cutting jobs for faster profitability

Gorillas is cutting jobs for faster profitability
Written by insideindyhomes

Status: 05/24/2022 11:09 am

Profits instead of growth: The Berlin start-up Gorillas is attempting a strategic U-turn. The delivery service is reviewing its expansion strategy and laying off 300 employees to cut costs and become profitable faster.

The fast delivery service Gorillas wants to be in the black faster than originally planned. In order to achieve this goal, the start-up company has announced deep cuts in the workforce: around 300 employees, which corresponds to half of the employees in the management of gorillas, will be laid off. The company announced this.

According to company boss Kagan Sümer, Gorillas also wants to examine “all strategic options” for its business in Italy, Spain, Denmark and Belgium. This could mean a cessation of activities, but also a sale or a reorientation. Now Gorillas wants to focus on Germany, France, Great Britain, the Netherlands and the USA in order to save costs. According to Sümer, these countries currently account for around 90 percent of the business.

billion valuation within two years

The Berlin start-up company, which was only founded two years ago, had expanded massively in the highly competitive delivery business and was valued by investors at around 2.5 billion euros at the end of 2021. In October, Gorillas raised 860 million euros from investors through a round of financing, money that was initially used primarily to expand the business. The DAX company Delivery Hero also got involved with Gorillas last year and invested 235 million euros in the stake.

In terms of its growth strategy, Gorillas was also rather uncompromising when it came to its employees. In the spring, the company fired employees who had gone on strike for better working conditions.

Company boss Sümer now described a realignment of the strategy in an interview with the Reuters news agency. “Looking at the capital markets at the moment, we have to take further steps to pave the way to profitability,” says Sümer. They want to go public as a profitable company. When it comes to growth, however, the pace is still right: “Since October, we have tripled our business and ninefold our efficiency.”

Risk is “irritating”

Apparently, the sponsors of Gorillas have sent appropriate signals to the company in the background. Risk is now “irritating for investors,” says the manager. That makes it difficult to collect money at the moment. This should also apply to potential investors before and after the IPO. According to the industry service Deutsche Startups, Gorillas had already examined an IPO via an investment vehicle SPAC (special purpose acquisition company) in the spring. In view of the current market environment, the current stock market plans are likely to have been postponed for the time being.

Reducing fixed costs appears to be at the heart of gorilla austerity efforts. The 300 employees who are now being laid off work exclusively in administration. The approximately 14,000 drivers are not affected by the job cuts.

Gorillas specializes in delivering food items ordered via an app to customers’ homes from Gorillas’ mini-warehouses within a very short time. However, the competition is fierce and in cities like Berlin, Flink, the Doordash subsidiary Wolt and Getir also offer similar services.

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