- Postmates has closed its Mexico City office and laid off dozens of employees across multiple offices, including its San Francisco headquarters as well as Los Angeles and Nashville, Tennessee offices, according to CNBC.
- "We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the U.S.," a Postmates representative told CNBC. "We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result."
- One source also told CNBC the third-party delivery company is also in talks to find a potential buyer.
With increased investor scrutiny over delivery providers, which have yet to have become profitable, Postmates and even DoorDash have been rethinking their IPO plans. Postmates has yet to go public even though it filed paperwork with regulators confidentially early in 2019, but it did receive $225 million in funding from GPI Capital in September as a bridge round on its way to an IPO. CEO Bastian Lehmann has previously said that the company is holding off until market conditions improve after seeing fallout from recent IPOs from WeWork, Uber and Lyft.
Even though the U.S. is a growing market for the company, Postmates has long-struggled to gain significant traction, often coming in fourth for market share. It expanded across the country and reached into all 50 states this year and has added features like group ordering and partnered with stadium and event venues to offer pickup services. But the likes of DoorDash are growing quicker, even surpassing Uber Eats and Grubhub, which led the pack in March 2018, according to Edison Trends.
Analysts previously told Restaurant Dive that the delivery segment would eventually enter a consolidation phase since there are just too many companies offering the same service and it would likely come down to two or three companies remaining. Investors have started to turn on the prospects of food delivery as well, and Grubhub was the latest to see stock prices stumble after worse than expected earnings and its CEO saying it would have to change its strategy to compete with other providers.
This sentiment toward Grubhub hasn't concerned Lehmann, who said in November that the problems Grubhub was experiencing were a problem specific to Grubhub and not the food delivery segment. Going forward, companies would have to distinguish themselves from others, he said, adding that Postmates has been particularly appealing to millennials.
While Postmates' latest business decisions could just be a move toward better profitability and renewed focus on the U.S., layoffs are never seen as a good sign. Rumors have also resurfaced that it is exploring a sale. Earlier this year, Vox reported that it was considering an acquisition to Uber, DoorDash and even Walmart for some time, but Lehmann said in July that its plan was to go public. Whether or not it chooses to go public or enter into a sale will be a telling sign over the future direction the delivery segment will take.