Startups that soared throughout the pandemic are now feeling the crunch, and on-demand grocery company Gorillas is the latest victim. The company announced Tuesday that it's laying off half its corporate staff, or about 300 employees around the world.
"Two months ago in March, the markets turned upside down, and since then the situation has continued to worsen," Gorilla co-founder and CEO Kagan Sumer said in a message to staff. "Very rapidly, greed in the markets was replaced with cautiousness. And tech companies, especially low or negative margin tech companies, are facing a very strong headwind."
Gorillas also employs roughly 14,400 warehouse and delivery drivers, The Verge reported. For those impacted by the layoffs, Gorillas said it has "identified ways to ensure that everyone is supported financially."
The company said it will narrow its focus on the five markets where it makes 90% of its revenue: Germany, France, the U.K., Netherlands and the U.S. It's also considering expanding into Italy, Spain, Denmark and Belgium.
The layoffs signal a broader trend that grocery delivery demand may be slowing as pandemic restrictions are lifted.
Gorillas, which Sumer started in May 2020, promises to deliver groceries in as quickly as 10 minutes — a business model that seems pretty unsustainable — and unprofitable. The company is competing with major delivery businesses like Instacart, Amazon and Gopuff for a customer base whose demand for quick grocery delivery has declined now that lockdowns are a thing of the past.
Sumer in his letter to staff made a bold prediction: "In January 2020 there were 30 players in our industry. In January 2021 only 15 remained. In January 2022 you can count four. And now the stage of the final four begins, where one year from now there will be only 1-2 players remaining. Gorillas will be this player. And this requires a new plan."
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE