Nobody wants to pay for ultra-fast food delivery.

Ultra-fast delivery startups are either folding up or leaving markets, exiting the scene as quickly as they arrived.

Ultra-fast delivery startups face challenges as they try to grow amid a volatile market. Investors are increasingly prioritizing profits and becoming wary of investing in unprofitable companies, leading to a slowdown in the sector. Nearly 30% of orders from the most significant ultra-fast delivery player in the US, GoPuff, were discounted as of April, according to data from YipitData. In other countries, the share of discounted orders is even higher, with Turkish ultra-fast delivery startup Getir having over 80% of its orders ignored in countries like Germany and France. Discounting is a way for delivery companies to attract and retain customers, but when the percentage of discounted charges remains high, it implies a less clear path to profitability.

In the past couple of years, the demand for delivery services has skyrocketed, leading to the emergence of ultra-fast delivery startups. Venture capitalists invested $28 billion in the sector globally, more than double the amount in 2019, according to data from PitchBook. These companies, like GoPuff, Gorillas, and Getir, burn cash fast to move into new markets and attract customers with cheap services, but their model only works best when markets are stable, and funding is plentiful. Making money in food delivery is difficult as the revenue is split among the retailer or restaurant, food delivery company, and worker, and it’s even harder for faster delivery which requires hiring workers as employees and often has no minimum order, leading to a costly loss for ultra-fast delivery companies. The question remains whether these companies will be able to sustain losses at a time when funding is harder to come by or will they follow in the footsteps of past rapid delivery companies that went out of business during the dot-com boom.

The article is “Nobody Wants to Pay for ultra-fast food Delivery.“