Southeast Asian superapp and ride-hailing giant Grab will discontinue its cloud kitchen service GrabKitchen in Indonesia after four years of operations amid efforts to adopt an asset-light business model, the company said in a statement on Saturday.
The decision to shutter GrabKitchen, which is also attributed to inconsistent growth, will take effect from December 19, 2022.
“This tough step is an effort to ensure the continuity of [Grab’s] other businesses, whose sustainability plays a major role in the recovery and economic growth of the community,” Mayang Schreiber, chief communications officer at Grab Indonesia, said.
The closure will impact “more than a dozen” Grab employees and merchant partners in 40 locations.
“For the affected employees, Grab gives an opportunity to explore available positions in other divisions,” Schreiber said, noting that those who part ways with Grab will be offered additional compensations such as the goodwill payment and health insurance coverage until the end of 2022.
For affected merchant partners, Grab offers additional compensation of as much as 60% of the merchant’s monthly gross sales in September and they don’t have to pay rent for Oct 15 to Dec 19 period.
Ripples beyond kitchen
A source privy to Grab’s operations told DealStreetAsia that the closure of GrabKitchen is part of the tech company’s journey towards profitability.
Earlier this year, Grab had announced that it will discontinue its quick commerce service in Bandung, West Java. Grab claimed that the company was still testing different delivery models in different cities to find the best product-market fit.
For the second quarter of 2022, Grab had reported a net loss of $572 million, a 29% improvement over the $801 million recorded in the same period last year.
Grab opened GrabKitchen in 2018 to cater to food deliveries from small businesses and large brands such as Sour Sally, Kopi Kenangan, and others.
In the early days of its operation, GrabKitchen received praise from small restaurants for boosting their sales and allowing them to sell their products at a time when retail stores were closed.
Back in early 2021, Grab also announced its cooperation with cloud kitchen management company Yummy Corp, allowing data collected by Grab to be used to its full potential by Yummy Corp’s operational management.
Grab representatives declined to comment on the partnership.
Grab’s decision may create a ripple in the market. Grab’s direct competitor Gojek also has a cloud kitchen called Dapur Bersama. Both Grab and Gojek provide infrastructure and their own brands.
Meanwhile, there are other competitors from food brands such as Hangry, Dailybox, Mangkokku, and Legit Group that each operates in their own locations.