Profit squeeze devouring takeaway start-up Plum

Top News | Jane Cheung 28 Nov 2018

Food-delivery start-up Plum is struggling to survive just one year after it opened for business with 600 restaurant partners. It is set to lay off 100 staff - almost its entire crew.

Unlike three major food takeaway firms in the mainland - Meituan, which is listed in Hong Kong, and Baidu Waimai - Plum now has a "very limited" daily operation, confined to taking orders from office districts, notably Central, where the company is based.

The company suspended delivery services to Tseung Kwan O on Friday. Two months ago, it fired 50 staff.

Founded in November last year, Plum competes with Uber Eats, Deliveroo and Food Panda in providing delivery services. Customers can order dishes gathered from the company's daily selection of partner restaurants on its mobile app.

It earlier offered dishes for lunch from HK$35 to HK$80.

The start-up has confirmed that 100 staff will be sacked by year-end, leaving only one or two full-time staff. Several others, mostly "co-founders," may stay on with the company.

Desmond Cheung Hon-leung, one of the co-founders and formerly an investment banker, said risks are expected when joining a start-up.

"On day one when joining a start-up, [staff] should be prepared for the risks," he said.

The company banked on earning profits by partnering with 600 restaurants across the city, which offered lunchboxes at discounted prices.

Lunchboxes were prepared in the morning, ahead of restaurants' peak lunch hours.

The start-up sent delivery teams to pick up meals which were then distributed to customers to about 70 collection points in different districts.

Plum saw rapid business growth between November last year and summer this year, when it generated large volumes of orders from office districts during lunch hour.

At its peak, the start-up was generating up to 10,000 daily orders.

To adapt to the rapid business growth, the company expanded its staff to more than 200.

But in August, profits started falling and the company laid off about 50 staff in September.

The start-up also cut salaries of management-grade staff.

Plum's setbacks came after it got involved in an alleged food poisoning case in July. That was when seven office workers ordered an eel egg rice dish from a Korean restaurant and the customers later displayed food-poisoning symptoms.

The incident sparked discussions over delivery methods and preservation of freshly made meals.

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