From the moment it launched in 2017, Hugo, a last-mile delivery service that offered users everything from food and cash delivery to concert ticket collections, went toe-to-toe against Uber Eats and other global delivery giants. For a while, the Salvadoran contender came out on top. Then, on January 4, Hugo’s founders announced in a statement that the company would be shutting down on January 10.
Rest of World visited Hugo’s offices in San Salvador on the startup’s final day of operation, and spoke to three delivery drivers, two corporate employees, and the company’s founder, Alejandro Argumedo. All of them agreed it was an emotional farewell, and a profound change for the last-mile delivery scene in El Salvador. Yet, while executives and many corporate employees are looking forward to cashing in or moving on to PedidosYa, the company that acquired the startup’s operations, Hugo’s delivery workers say they are the ones paying for the brunt of this change.
“It placed a noose around our necks,” Carlos Paz, who has been a delivery driver with Hugo for two years, told Rest of World. “PedidosYa pays badly, between 60 and 90 cents per delivery, and we have to work under the sun, pay for gas, and maintain the motorcycles. It’s not worth it.”
César Villalona, a Dominican-Salvadoran economist at Fundecen, the Foundation for Central American Development, told Rest of World drivers were definitely taking the hit. “They’ll now be making less money per kilometer, which means that their quality of life will worsen,” he said. “All of this to allow Delivery Hero to earn back what they paid to acquire Hugo in less than 10 years.” Delivery Hero is the Berlin-based parent company that owns PedidosYa.
This end of an era has been visible on the streets of San Salvador. The masses of delivery drivers, clad in Hugo’s trademark purple, are nowhere to be seen at their usual gathering places — shopping malls, convenience stores, or restaurants. Instead, they have been replaced by PedidosYa’s fleet of delivery motorcycles. Meanwhile, at Hugo’s downtown headquarters, the accounting department has been working round-the-clock to ensure that no shops have been left unpaid before closing operations. In the IT department, the workers’ final task was to get the app to display a message that read “Now Hugo is PedidosYa.”
Hugo had been a titan in its own right in the Salvadoran tech scene. In 2019, delivery platforms accounted for 11.9% of El Salvador’s technology and information sector. Hugo represented around half that. The startup raised over $24 million in venture capital funding, registered more than 14,385 drivers, and serviced 12,347 merchants in the region as it expanded to six countries by 2021.
That same year, the startup announced it had been acquired by Delivery Hero for $150 million. Argumendo, the founder, told Rest of World the agreement had been that PedidosYa and Hugo’s operations would coexist as separate entities. But, as the global tech funding crunch raged on, Delivery Hero decided to fold Hugo’s brand and operations into its parent company.
Businesses affiliated with Hugo were informed about the startup’s shutdown in December 2022, but Paz, the Hugo driver, told Rest of World that drivers had been kept in the dark. “I found out midway through December, but not because Hugo told me,” he said. Rather, Paz said a business affiliate mentioned to him that they’d received a letter telling them Hugo would be closing definitively on January 10.
On January 4, Hugo’s sudden public announcement of its shutdown took customers and delivery workers by surprise. Users posted screenshots of what had been the Hugo app’s home screen, which now prompted them to download the PedidosYa app. For gig workers, though, the change has been a lot tougher.
Hugo’s closure means that delivery workers will now have to work twice as much to make what they had been previously earning, Eduardo Mejía, a former Hugo delivery driver, told Rest of World. Earlier, Hugo’s offer of a flat fee of $2 per delivery had been one of the app’s attractions for delivery workers. This, along with customer tips, made for higher and more stable earnings. “Now you have to use other apps that pay less,” Mejía said.
One of those other apps Mejía referred to is now his new employer, PedidosYa, which, as of January 10, was supposed to automatically incorporate him and his fellow delivery drivers into its platform.
In an interview with Rest of World, Argumedo defended the decision to shut down Hugo: “We decided to unify both platforms to achieve efficiency because, given the current state of the world, it didn’t make sense for Delivery Hero to maintain two teams.” Argumedo added that despite layoffs over the past months in preparation for the move, many of Hugo’s administrative staff would be moving to PedidosYa. Argumedo said Hugo’s Honduras operations would move under his supervision.
But delivery drivers told Rest of World the transition to PedidosYa hasn’t been as streamlined as Hugo’s founders claim. “I’ve heard that some people have been called to join PedidosYa,” said Mejía. “But I haven’t, I’ve had to find another platform on my own.”
Paz didn’t mind too much that he hadn’t been automatically recruited to PedidosYa. “My family depends on my income, so this is a big hit,” he said. “I might have to look for another job, it might be better to earn minimum wage for eight hours a day than to be exploited.”