Bloomberg Línea — Brazilian delivery behemoth iFood will shut down its operations in Colombia on November 21, as part of a wave of layoffs and downsizing at technology companies in the region.
The Prosus-backed company said the exit is part of the strategy of iFood and Delivery Hero, a German company with which iFood has a joint venture in Colombia, to leave the country and focus on its priority markets.
“The decision is a business strategy in light of the moment in the capital markets,” the company said in a statement. iFood said it “will continue investing in Brazil, where it was born and is a leader”.
During the process of closing operations in Colombia, iFood said it “will offer support and information to all customers, deliverers, and restaurants, meeting any demands and questions in the best possible way”.
In April 2020, iFood bought Domilicilios.com in Colombia, a subsidiary of Delivery Hero. Since then, the Colombian operation was 51% owned by iFood and 49% by Delivery Hero.
Leaving a market where the company is not a leader was also a strategy adopted by Uber, which stopped operating Uber Eats for restaurant deliveries in Brazil, to which Uber CEO Dara Khosrowshahi told Bloomberg Línea in June that “there is no reason to stay in a country if you can’t be the leading platform”.
However, in talks with Bloomberg Línea recently, Rappi’s country manager in Brazil, Tijana Jankovic, said Rappi has no plans to leave Brazil.
South Africa’s Naspers/Prosus recently acquired JustEat’s stake in Movile, owner of iFood, and fully controls the company’s operation.
The transaction was valued at $1.8 billion for the remaining 33% of iFood, which belonged to Germany-based JustEat, and which gave iFood a $5.4 billion valuation.
The transaction made iFood the most valuable privately-held startup in Brazil and second-most vauable in Latin America: only Kavak ($8.7 billion) is worth more.
Rappi was valued at $5.25 billion after a $500 million funding round in July last year, according to PitchBook.
In Latin America, Delivery Hero has controlled PedidosYa since 2014, which initially operated in Argentina, Brazil, Chile, Colombia, Mexico, Peru, Puerto Rico, Venezuela and Uruguay.
Total iFood revenue was $991 million in the fiscal year that ended March as it expanded to additional cities in Brazil, while losses across the operation were $206 million, driven by investments in the supermarket delivery front.
“We want to thank the entire ecosystem for their unconditional support, as well as our team and all Colombians who have been part of our iFood platform in Colombia,” the company said.
In late August, iFood said it would seek to be Colombia’s first profitable delivery app.
“Technology companies, especially delivery apps, have revolutionized the market with their exponential growth between 2019 and 2022, and platforms have gone from representing 19% of restaurant sales to 35% according to Green Information Group,” iFood said at the time.
The company had also said it would focus its operations in nine cities: Bogotá, Barranquilla, Cali, Palmira, Manizales, Soledad, Valledupar, Montería, and Santa Marta, and also set out to increase the offering available on the platform, tracking restaurant training and productivity to increase its revenue.
In August, iFood had said it would maintain competitive commissions in the market and ensure better logistics for home-based ones.
“The company seeks to follow its profitability strategy with positive impact and responsibility for its entire ecosystem,” it said at the time.
-- Isabela Fleischmann contributed to this report
