The online food delivery space has been under fire for various reasons including massive layoffs, shutdowns, and restructuring. After TinyOwl and Zomato, foodpanda recently laid off over 300 employees and reportedly shut operations in six cities. Rocket Internet-backed foodpanda was also under media scrutiny for poor work culture and processes; however, the company is unfazed by such fiascos.
Saurabh Kochhar, CEO, foodpanda.in, says:
Being leaders in an industry brings its fair share of challenges. We have borne the brunt of being the leader in the food ordering business by facing challenges first.
To understand foodpanda’s perspective on a range of topics including culture, layoffs, future strategies and speculation about its global plan to exit from India, YourStory spoke to Saurabh Kochhar, CEO, foodpanda.in.
foodpanda isn’t rolling back from any cities
Some media reports last week claimed that the Gurgaon-based company will be shutting down operation in six cities in January, but Kochhar denies it. He adds,
We have not withdrawn our services from any city and there is no plan to do so.
According to a media report, the company is rolling back from Kolkata, Chennai, Nagpur and Coimbatore and two other unnamed cities.
On growth and culture
Backed by German incubator Rocket Internet, foodpanda secured over $310 million risk capital from Samwer Brothers and Goldman Sachs. The Indian arm of foodpanda claims to have had 10X growth in 2015, and developed the ability to leverage efficiencies across many different departments. “We built a proprietary data warehouse, which makes all type of analyses and reports automatic including a point-of-sale system for restaurants, which makes order transmission and menu updates automatic,” adds Kochhar.
“The food ordering industry is still in a very nascent stage in India and we will continue to innovate as we move forward. Over the last few months, we have streamlined our teams and processes and our culture now thrives on nothing but excellence,” says Kochhar.
Are mass layoffs still on the cards?
Online food ordering and delivery startups had a cozy ride till the first half of last year but the second half was a reality check. Many startups in this space wound up their operations because of a funding crunch, while the major ones had mass layoffs to curb the unsustainable burn rate.
foodpanda also had laid off over 300 employees last week and the company cites efficiency and automation as reasons for firing 15 per cent of its headcount in India. When asked about possibilities of such mass layoffs in future, Kochhar adds,
At present, we do not have any such plans as we continue to grow at a rapid speed.
Currently, the company has a strength of over 1,900 employees. “We continued to invest in processes and technology but also had to take necessary and difficult step like layoffs,” states Kochhar.
foodpanda is committed to Indian market
Disappointed by alleged mismanagement and controversies, foodpanda was reportedly looking to exit from India. According to YourStory sources, foodpanda was also in talks with Info Edge-funded Zomato for possible synergies . Zomato also entered the food delivery segment last year. Meanwhile, Kochhar doesn’t say this explicitly, but assures us that foodpanda is committed to the Indian market. Kochhar adds,
We are focussed on building a self-sustainable and profitable business.
According to Kochhar, foodpanda is building scalable revenues and capabilities with a long-term goal. He adds, “We are on the right path towards sustainability and profitability, and will turn so in the next three years.”
Is the viability of the food ordering and delivery business a concern?
Foodtech saw a round of frenzied investing in April last year when it seemed to be the next big thing, and many funds (at the seed stage) placed parallel bets in the space. Observers doubt the viability of food and grocery delivery startups even in a long run.
According to foodpanda - 99 per cent of the food ordering market in India is still offline; only a small fraction is online. “It’s still a very early market and we are exposed to one of the biggest opportunities on the Internet overall,” says Kochhar. As far as profitability is concerned, the company says it’s on the right path towards sustainability and profitability. He adds:
Marketplace businesses generally require many years to turn profitable. We are slated to taste profit in the next three years.