Jeon Jun-hee, CEO of Yogiyo, “100 billion deficit… a situation that is even more difficult to handle”

[이코노미스트 이혜리 기자] Yogiyo, a delivery platform operated by Great Imagination, is implementing voluntary retirement for the first time since its founding. Yogiyo, which is one of the ‘Big 3’ along with Baedal Minjok and Coupang Eats, is interpreted to have decided to reduce costs through workforce reduction as deficits pile up and performance continues to deteriorate due to cutthroat competition in the delivery app market.

According to industry sources on the 29th, Jeon Jun-hee, CEO of Great Imagination, announced in a ‘CEO Letter’ email to employees the previous day, “In order to overcome the current crisis and maximize our chances of survival in the market, we will implement a voluntary retirement system for regular employees.”

This time, Yogiyo decided to accept applications for voluntary retirement without any restrictions on rank, position, years of service, or age. It is known that they plan to pay 4 months of fixed monthly salary to those who take voluntary retirement. Those who have worked for less than 1 year will receive 4 months of fixed monthly salary in a lump sum in proportion to the number of days worked. Yogiyo also decided to abolish the telecommuting system that has been implemented at the discretion of department heads starting in October.

Applications for voluntary retirement will be accepted from the 2nd to the 13th of next month. After review from the 2nd to the 20th of next month, retirement will be made on the 27th. Retirement settlement will be made on the 30th of next month.

The former CEO emphasized, “We are experiencing an unprecedented crisis due to competitors’ introduction of free delivery and subscription services, overheated cutthroat competition, and strengthening of various regulations,” and “We have pursued various strategies such as YPXN, discount ranking, and regional strategies to enhance customer experience and increase sales, as well as cost reduction to improve profitability, and have achieved some results, but it is still not enough to overcome the current situation.”

In particular, he said, “We have reached a point where it is difficult to sustain the accumulated deficit of approximately 100 billion won from last year to this year and the market share that continues to decrease despite various efforts.”

It is analyzed that the cutthroat competition among companies had a decisive influence on Yogiyo picking up the voluntary retirement card. Earlier this year, Yogiyo was hit hard by the cutthroat competition among companies that promoted ‘free delivery’, resulting in accumulated deficits and a decline in market share.

Great Imagination, the operator of Yogiyo, has recorded operating losses for two consecutive years from 2022 to last year. Last year, Great Imagination recorded an operating loss of KRW 65.5 billion and a net loss of KRW 484.1 billion on a consolidated basis.

Yogiyo, which was in second place in the industry until last year, recorded 5.71 million monthly active users (MAU) based on the mobile index in March of this year, giving up the second place to Coupang Eats with 6.26 million. The gap in MAU in July, the most recent month, also widened further, with Coupang Eats at 7.54 million and Yogiyo at 5.53 million.

To compete with Baemin and Coupang Eats, Yogiyo lowered the subscription fee for its subscription service ‘Yogi Pass X’ from 4,900 won to 2,900 won in March and also carried out an organizational restructuring in May, eliminating some departments.

The former CEO said, “The financial resources prepared by the company may not be enough for those considering voluntary retirement,” but added, “I hope you understand that these are the financial resources that were secured with difficulty even in difficult situations where we had to worry about the company’s survival.”

ⓒThe Economist (‘Economist, economic news for tomorrow’ Unauthorized reproduction and redistribution prohibited)