Foodpanda becomes operationally profitable in transaction revenue

Rocket Internet backed, online food discovery and delivery firm, Foodpanda, which downsized its India headcount by 300 last year, has turned the corner to become operationally profitable in transaction revenue.

The company aims at overall profitability by FY19 with the introduction of high margin, value-added products such as the recently launched ‘Express Meals’ delivered within 30 minutes in Gurgaon, which will be launched in the Bengaluru next month.

“Foodpanda attracts 10 million unique visitors a month, and averages 70,000 transactions a day, which is a 10X growth over last year. We now offer menus from 12,000 restaurant partners from 200 cities pan India, which is available on our app and Web site; receive commissions of 15-25 per cent on food deliveries from restaurants and have turned operationally profitable in transaction revenue in January,” Saurabh Kochhar, CEO, Foodpanda India, told BusinessLine on the sidelines of global tech and start-up conference SURGE 2016.

The company has adopted a hybrid model where 30 per cent of total deliveries are made by its own delivery team and 70 per cent is handled by the restaurants. Of its 2,000 employees, 1,200 are part of the company’s delivery/logistics arm.

Pointing out that the company is losing money because of its investments in technology, marketing and delivery/logistics, Kochhar said, “Our value-added products and services will make us a profitable company by FY19.”

Foodpanda offers special food packaging services with quirky artworks to its partner restaurants, which is reusable, has zero spillage and keeps the food hot. It also sells restaurant management software to its partner restaurants and recently introduced its value added ‘Express Meals’ in Gurgaon which serves pre-set combos of North Indian and Chinese veg and non-veg food options at ₹149 to ₹225, available between 12 noon to 4 pm.

“Our value-added products and services will take us to profitability. For instance, these Express Meals push up our commissions to 35 per cent,” said Kochhar. Asked about recent reports of Foodpanda looking to exit India, Kochhar rubbished it saying, “The report is totally baseless. On the contrary, we are expanding our India operations with need based hiring and a razor sharp focus on speed of deliveries and customer satisfaction. Why would we want to exit India when we are clearly the market leaders in our space and are growing at a phenomenal pace.”

According to Sreedhar Prasad, Partner, Management Consulting at KPMG India, need based businesses in e-commerce such as food delivery companies will stabilise faster as they have simpler business models. However, companies with trigger based/value-added models could be game changers where there would be a lot of impulse purchases from customers and higher profitability, he said.

Foodpanda.in has raised a total of $310 million since its launch in May 2012 and is looking to raise $100 in Series C funding from an India fund for further expansion. It is the Indian arm of the Berlin headquartered company which operates in 40 countries and partners with 60,000 restaurants.

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