Mobile and online food ordering marketplace Foodpanda on Tuesday refuted reports in a leading daily, which stated that the company may be up for sale.
According to a report in The Economic Times: “The company (Foodpanda) recently mandated Mumbai-based mid-market investment bank O3 Capital for a $40-60 million fund-raise as it initiates talks with investors, may opt for sale.”
In an exclusive interview to Indiaretailing, Foodpanda CEO Saurabh Kochhar said, “Seeking funds for any company working in today’s business environment is a constant endeavour in spite of the money in reserves for the company. o3 Capital is supporting Foodpanda during the current fund-raising process for Foodpanda India. We are not looking to exit India. We have grown rapidly over the last few months, while increasing our already positive operative margins and would continue to do so.”
Milestones Achieved
To strengthen its leadership position in the market, Foodpanda acquired TastyKhana in November 2014 and JustEat in February 2015. The company is currently present in over 200 cities in India and has more than 12,000 restaurant partners.
The food ordering platform which has touched over 70,000 orders, works on two models – marketplace model and delivery model. It has been reaping profits on both the models individually as well as collectively.
According to Kochhar, “We are now reaping the benefits of automation. In fact, we have seen a 30-40 per cent surge in number of orders after March. We are no longer losing any money per order.”
The company reported net revenues of Rs 75 crore for the January-March 2016 period, a sequential increase of 20 per cent. Besides, losses came down significantly to 13 million euros from 30.3 million euros in the previous quarter.
READ MORE: foodpanda automates order flow, eyes profits in next three years
“We are not incurring any loss on per order. Also we have been able to bring down the cost of customer acquisition by 20-30 per cent. However, the scale of our business has grown in the last one year, hence losses too have increased. Other reasons for the increase in loss is that we are investing more money in continuous improvement of technology besides marketing,” says Kochhar.
Adding, “For example, from the period July till August we have spent Rs 2-3 crore per month on advertising on television. The tech team has 150-200 people. Then there is corporate overheads. So in the short term losses would increase. The aim is to increase the number of orders and commission, which will help in covering the corporate overheads.”
Recent Developments
Foodpanda has recently launched industry first quality compliance initiative Food Doctor Program (FDP). The program is introduced with the aim of educating the 12000+ restaurant partners on the basic and best practices available for hygiene and quality standards.
The firm is going to focus on quality standards for all the kitchen ops cycles, right from procurement of raw material to the final stage of dispatching packaged food from the restaurant to the customer.
Commenting on the new initiative, Kochhar says, “Restaurant hygiene and quality are the biggest apprehensions in mind of the customer today. With Food Doctor Program, we intend to bring more transparency on these aspects. We have always used our technological innovation and resources to bring best food ordering and delivery experience to our customers – whether with almost 100 per cent automation, 45 minute express delivery guarantee or this. We believe this will be an essential step towards the uplifting the broader food ordering ecosystem in India.”
READ MORE: Food delivered in 45 mins or money back, says foodpanda
The company is also partnering with e-commerce focused logistics company Ecom Express to facilitate last-mile deliveries to the consumer’s doorstep using its own fleet of delivery executives. A pilot will be launched in September in Delhi and Gurugram. The company plans to expand the services to Hyderabad, Bangalore and Pune if the pilot becomes a success.
A few months ago, Foodpanda implemented a near complete automation of its order flow to become more operationally efficient with lower staff levels. It has also launched a service to ensure delivery within 45 minutes that will be available in Delhi, Pune, Hyderabad, Mumbai and Bengaluru.
Apart from this, it has also introduced Xpress Meals which is currently operational in Gurugram and Bengaluru. The food ordering platform offers cashback to its customers under this program.
Last year, Foodpanda had collaborated with IRCTC to provide customers with the choice to order meals at least two hours before the travel.
Investment Rounds
o3 Capital is supporting Foodpanda during the current fund-raising process for Foodpanda India. Apart from this, the company has raised US$ 318 million in different rounds of funding.
In May 2013, it raised US$ 20 million from AB Kinnevik, Phenomenon Ventures and Germany’s Rocket Internet. Rocket Internet builds online startups and owns shareholdings in various models of Internet retail businesses.
In September 2013, a US$ 8 million investment round was led by iMena; US$ 20 million by Phenomenon Ventures and others in February 2014; US$ 60 million by Falcon Edge Capital, Rocket Internet and others in August 2014, US$ 110 million by group of investors in March 2015 and US$ 100 million by Goldman Sachs, Rocket Internet and others in May 2015.
Future Plans
Foodpanda is planning to launch a Foodpanda preferred program soon where it will highlight the best restaurants in different categories.
Apart from this, it is also planning to expand the fleet. At present, Foodpanda has 1,500 riders delivering food.
“We are on the path to achieve profitability and we have set a goal of three years. Besides technology, the delivery side of the business still requires some amount of work. We are adding more delivery boys to the existing fleet. We have about 1,500-2,000 delivery boys currently. At present, 40 per cent of the orders are delivered by our fleet and the rest 60 per cent orders are delivered by restaurants. Till end of December 2015 only 25 per cent of the orders were delivered by our delivery boys,” reveals Kochhar.
READ MORE: foodpanda buys Delivery.com’s Hong Kong assets
Foodpanda is currently functional in 40 countries and five continents.
O3 Capital is supporting foodpanda during the current fund-raising process for foodpanda India
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