Dive Brief:

• Robot delivery company Starship Technologies has ended its partnership with The Save Mart Companies that began in 2020, The Modesto Bee reported on Wednesday. A spokesperson for the grocery chain told the paper that the technology company exited the Northern California market earlier this month.
• Two spokespeople for Save Mart declined to offer further information when reached by Grocery Dive, saying inquiries should be directed to Starship.
• A spokesperson for Starship responded with a link to a company announcement earlier this month that it is laying off workers and closing facilities in the U.S. and Germany to “focus its services to locations that meet its profitability goals.”

Dive Insight:

Just months earlier, Starship and Save Mart had expanded their delivery partnership, and the tech company announced a $42 million Series B round, which it told TechCrunch at the time would help grow its footprint in both Europe and the U.S. That funding round followed a €50 million ($57 million) investment from the European Investment Bank a few weeks prior.  

Now the robotic delivery company, whose small white bots ferry food orders along sidewalks and other pedestrian thoroughfares, has changed its tune. 

In a message to staff on June 9, which Starship subsequently posted online, CEO Alastair Westgarth said that the “significant downward shift in the global economy and capital markets’ changing their investment strategies has meant we have needed to make changes and increase our focus on costs and profitability improvements which will allow us to safeguard Starship’s long term future.”

As part of four major steps outlined by Westgarth, Starship cut its global team by 11%, including employees in the U.S., and ended service at a “small number” of sites in the U.S. and Germany, without disclosing the exact locations. 

“We have chosen to close the locations that do not have a near-term roadmap to profitability as we have learned some locations are not consistent with our cost improvement objectives,” Westgarth said. “This is down to a combination of factors that impact our commercial results, like the number of merchants that participate, and the number of potential customers in a service area.”

The company has also cut back its monthly capital expenditures and is looking at “all other expense items across the company for optimization,” Westgarth said.

Since starting commercial deliveries in 2018, Starship has logged more than 3 million deliveries. 

Save Mart and Starship initially linked up in September 2020 with Starship’s sidewalk-roaming bots handling the delivery of orders from Save Mart’s flagship store in Modesto, California. In February, the companies announced they had expanded delivery by the robotic vehicles to a Lucky California supermarket in Pleasanton, California.

The Save Mart partnership followed Starship teaming up with Broad Branch Market in Washington, D.C. in March 2020. Just a few months later, in August, the independent grocer noted on its Instagram that the pilot program was ending.

Starship has added its bots to a growing list of college campuses, where they deliver orders from restaurants and campus dining facilities. This includes the University of California-Los Angeles, Bridgewater State University in Massachusetts and, most recently, the University of Tennessee, Knoxville.

In April, Starship linked up with grocery store chain Alepa, which is owned by major Finnish retail operator HOK-Elanto Group. The tech company noted in May that it had commercial operations in six countries. 

Starship’s layoffs come at a time when tech companies, including several ultrafast delivery firms, are also struggling amid a backdrop of dwindling funding.