Singapore-based troubled delivery startup Honestbee has laid off around 80 per cent of its staff or roughly 100 employees in the city-state as it comes under pressure of a capital crunch amid the ongoing COVID-19 outbreak.
The Business Times and Straits Times reported that the terminations were made Monday evening, affecting both foreign and local staff. Honestbee verified the job cuts, confirming that it made a strategic decision to reduce its staff count, particularly in non-core sectors such as its brick-and-mortar grocery store Habitat.
Honestbee is no longer operational regionally. During its heyday, the Singaporean grocery startup was present in multiple markets across Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, Bangkok, Philippines and Japan.
“Due to several external commercial pressures that have resulted in the protracted closure of habitat by honestbee, the company has made the strategic decision to reduce its staff force. As a result, the company has decided to reduce its non-core staff as it does not foresee operating habitat in its full strength over the next few weeks,” said an Honestbee spokesperson in an email statement.
Habitat has been shut since February 10 or about a month now, due to the coronavirus outbreak resulting in a drop in walk-in traffic. The supermarket has even moved out of its spacious outlet at 34 Boon Leat Terrace to a tiny shophouse unit in Upper East Coast Road, according to reports. The swanky, digital-centric grocery store was once cited as a cornerstone of Honestbee’s turnaround plan.
That is becoming less and less certain right now.
Honestbee has yet to convince investors to put in some much-needed cash. The startup remains under interim court protection as it seeks to pass a scheme of arrangement to restructure itself out of some $230 million of debt.
A “retail conglomerate” was reported to have considered injecting some $50 million into Honestbee, but has since stepped back due to the COVID-19 outbreak and restructuring concerns.
In January, Honestbee signed an agreement with multiple existing investors to receive about $7 million in capital to pay off its creditors in a cash and equity deal to clean up its balance sheet. These investors were FLK Holdings, a US incorporated company backed by Brian Koo, Formation Group Fund I, and Formation Group (Cayman) Fund I. Brian Koo is Honestbee’s former chairman and interim chief executive. All three funds are linked to Koo. He is also Honestbee’s only secured creditor and belongs to the family which controls South Korea tech giant, LG.
Little is known about the future direction of Honestbee’s Habitat, except that it will be a quick-service restaurant (QSR) pizza concept and tech-enabled convenience store. Honestbee said that plans for this is still in its “very early stages”, with the convenience store focused on fast food service for takeaway. It will also likely tap on Honestbee’s existing technologies in payments and collection.
Honestbee’s next court hearing on its restructuring will take place on 26 March 2020.