Postmates Closes in Mexico to Focus on U.S.

The food-delivery startup is also laying off employees in the U.S. as it regroups after shelving an initial public offering.
Matthew HellerDecember 4, 2019

Postmates is pulling out of Mexico and laying off employees in the U.S. as it regroups after shelving its plan to go public.

The food-delivery startup on Wednesday confirmed it had closed its Mexico City office and acknowledged there had been other job cuts without specifying the number. According to CNBC, at least several dozen people were laid off in Postmate’s San Francisco headquarters as well as in Los Angeles, Nashville, Tennessee, and other offices.

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The Mexico closure “wasn’t an easy decision for us as we’ve already dedicated two years to establishing ourselves and growing this market,” Postmates told clients in a statement. “Looking towards the future, we believe focusing on our sustained growth in major U.S. markets is what we should do.”

The company’s service is currently available in more than 4,200 cities, covering 80% of U.S. households.

Postmates had planned to go public in the second half of the year but shelved the IPO due to market conditions following the struggles of other cash-burning companies such as Uber and Lyft and the near collapse of WeWork. It raised $225 million in September from private equity firm GPI Capital, which was considered a bridge round leading up to an IPO.

“Money has poured into food-delivery companies in recent months,” Business Insider said, citing DoorDash’s $100 million raise last month that valued the company at close to $13 billion.

“However, food-delivery startups are facing more and more questions about their business models and paths to profitability,” the publication added. “GrubHub’s stock plummeted by more than 40% in a day after it revealed a steep third-quarter earnings decline and gave a muted sales forecast.”

CNBC also reported that Postmates, which has about 1,300 employees, is looking for a buyer. Other investors in Postmates include BlackRock, Tiger Global Management, Glynn Capital Management, and EquityZen. Excluding the most recent funding round, the company raised $817 million between 2013 and 2019, according to company and investor search platform Cyndx.

Postmates launched in Mexico in late 2017, competing with U.S. giant Uber Eats, Colombia’s Rappi, Spain’s SinDelantal, and China’s DiDi.

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