Amidst a faltering food-tech ecosystem, online food ordering platform Foodpanda has implemented a near complete automation for its order workflow. The company has also restructured to become more operationally efficient with lower staff levels, said a top company executive.
As reported earlier, Foodpanda had cited automation as a cause for cutting its Indian workforce down by 15 per cent. The company had earlier reported that it has achieved about 98 per cent automation in order processing. This directly affected the manual workforce, making a few positions redundant.
Saurabh Kocchar, CEO of Food Panda, told PTI that,
The last six to eight months, we have worked on near 100 per cent automation of order flows to ensure operational efficiency to meet our target of becoming profitable in the next three years.
The Rocket-Internet backed company says that it is imperative to improve system response internally, because they still have to figure out several external challenges. The company now has over 2,000 employees and is working to optimize its resources to better sales in India.
Foodpanda has currently partnered with over 12,000 restaurants in 200 cities across India. It has no plans to expand to more locations but will work on improving its existing offerings. The company currently processes over 40% orders through internal fleet, while the rest is taken care by the partner restaurants.
The company is still operating on a commission model, with returns between 10 to 25 per cent on each order. While in certain cases, it can peak upto 35 per cent to focus on delivery times. It has also launched a service to ensure 45-minute delivery in cities, including Delhi, Pune, Hyderabad, Mumbai and Bengaluru.
Foodpanda launched in 2012, has now raised over $300 million from marquee investors including, Rocket Internet, Goldman Sachs, Phenomenon Ventures, among others. Rocket Internet has also led to the consolidation of its food-delivery business by combining 7 Asian startups with Foodpanda.
Kocchar further adds that the order automation and workforce reduction has led to a reduced burn rate, helping the company have sufficient funds at present.
Food order/delivery ecosystem in India
The food ordering and delivery industry is currently at a very nascent stage, with less than one percent orders being generated online. But, despite several barriers to entry, the industry is growing at a very fast pace.
According to industry estimates, the country’s food services market is worth $48 billion, of which the organized business is valued at $14 billion. And, it seems to show promising annual growth at a rate of over 25 per cent.
Despite the overall growth and predicted outputs, the startups in India are still struggling for a strong business foot hold. With valuations markdowns, business consolidations, merger and acquisitions, the companies are still trying to figure out a working business model.
Zomato has recently shown signs of consolidation, as it has pulled physical presence from over nine countries including important foreign markets like U.S, U.K, etc. In order to cut down operation costs to a meager $1.9 billion, the company has now decided to serve these countries remotely. Zomato has also seen valuation markdowns and reported staggering a 262 per cent change in losses this fiscal year.
TinyOwl, the (in)famous food-tech startup also seems to be stuck in a vortex of troubles, its unable to escape from. Starting with workforce layoffs, the company had to slowly and painfully shut operations in most cities. The cost of operation and inability to raise more funds has pushed the company to take this step.
But, the food delivery startup has been given a second chance, thanks to its merger with logistic startup Roadrunnr. This has now birthed a brand new food ordering startup under the moniker — runnr. The service od runnr are currently available only in Mumbai. Sequoia Capital and Nexus Ventures who are common investors in both companies are seen as driving force behind this decision.