On-demand food delivery company JOKR said it was shuttering its New York and Boston deliveries as of June 19 and leaving the U.S. market altogether, with co-founder and CEO Ralf Wenzel saying the startup is going to focus on Latin America.
“We have decided to stop our business activities in the U.S. for now, which have lately only accounted for about 5% of our business and with a very differently structured opportunity,” Wenzel said in a statement. “Given our unique position in Latin America, we decided to increase our investments in the region organically and by exploring complementary inorganic opportunities, expand our geographic footprint and expand on our service offering to become the leading and most customer serving online grocery business across Latin America, a 1.2tn retail market with less than 10% online penetration.”
The New York and Boston operations accounted for nine micro-fulfillment centers out of JOKR’s network of approximately 200 worldwide, according to Bloomberg. The move will also cut about 50 workers from its 950-person office staff.
In JOKR’s one-year lifespan, it has taken in more than $430 million, including a $260 million Series B round last November. At that time, the company said its valuation was $1.2 billion and touted itself as “one of the fastest companies to reach unicorn status in history.”
Perhaps it was a little too early for the company to toot its own “horn.” Even though JOKR hadn’t been in New York for that long, the news isn’t much of a surprise, actually, for a few reasons.
First, I spoke to Wenzel in April, and asked him about an Information story from February that discussed JOKR possibly selling its New York operations. At the time, Wenzel called it a rumor, telling me, “We’ve been operating in New York, and there’s no strategic shifts.”
However, he also hinted that the company was looking at its footprint in New York, saying, “In terms of looking into the warehouse distribution, we opened new warehouses and we closed other warehouses as we looked into what was the right location, what was the right proximity to different customers.”
While the company was mum on where, Wenzel’s comments implied that closings were likely ahead.
Wenzel said JOKR had been focused on “reinventing retail,” over the past 12 months, which entailed “how to especially disrupt the supply chain and procurement side of things.” When asked how that strategy was working out, Wenzel replied that things had been going so well that “we have now become fully gross profit positive on a group level for our local business across all of our countries after 12 months of operations.”
Second, as mentioned, food delivery companies are facing tough times as funding dried up and the rush to invest into this sector, partly as a result of the global pandemic, caused it to become quite inflated and due for a course-correct.
This became evident when some of JOKR’s competitors began announcing layoffs. For example, in May, Gopuff, Gorillas and Getir announced staff reductions. Zapp also had layoffs. TechCrunch took a deeper look at what was happening in the on-demand delivery space earlier this month and what it means for the industry going forward.