Foodpanda losses widen by 230% in FY19

Foodpanda, an online food delivery platform, has reported a 230% rise in its losses to Rs 756 crore in fiscal year 2019. In FY2017-18, Foodpanda, owned by ride-hailing major Ola, had registered loss of Rs 227.95 crore.

However, the company’s revenue from operations and other income rose 12.2% to Rs 81.77 crore in FY19 as compared to Rs 72.84 crore in the preceding fiscal.

Foodpanda said, “The online food ordering market is a multi-billion industry and provides ample opportunity of growth. We being an early player in the online food ordering and processing market have a deep understanding of the market dynamics and the revenue and profitability levers,”

Foodpanda’s management is revamping the entire process in order to focus on becoming leaders in food manufacturing and processing.

“To achieve this, we have built state-of-the-art kitchen infrastructure and launched various brands in different segments like shakes, khichdi, biryani, rice bowls and desserts. Our focus this year would be on further improving the customer experience and increasing our market share through a diverse and comprehensive product portfolio,” the company further stated.

Anchal Agarwal, CEO of Tofler, said that Foodpanda's burn rate of Rs 756 crore over Rs 82 crore of revenues is one of the highest among Indian startups.

“The significant increase in expenses from the last year is contributed by discounts provided and delivery charges incurred. It is interesting to note that the company has incurred delivery charges of Rs 267 crore compared to its revenues of Rs 82 crore. The discount expenses were to the tune of Rs 137 crore (that's nearly 1.5x of revenues),” she stated.

Agarwal further added, “Foodpanda's decision to build cloud kitchen brands makes sense in light of the surging expenses the company seems to have incurred in the previous year. They have also infused $100 million in the form of debt in the company.”

Food delivery Pros

Placing orders online proves beneficial to everyone. There are special discounts for new customers or discounts at various restaurants, always going on. A restaurant finder app can easily help you avail of such discounts. Brands and outlets have begun tying up with food delivery and hyperlocal mobile as getting listed on third-party Aggregators has proven very fruitful for them.

Food delivery Cons

There can also be a few obstacles that come in the way of food deliveries. Such startups need tremendous efficiency in order to overcome real-world challenges, meet customer expectations and turn profitable, all the while competing with the in-house delivery expenses of restaurants, which is not very large. Also, many restaurants still seem hesitant to get into this market due to their own valid reasons.