Foodpanda, present across 34 countries, was brought to India in 2012 by investment banker-turned-entrepreneur Rohit Chadda and former McKinsey consultant Amit Kohli. The company provides a restaurant index that facilitates search by cuisine, restaurants or even price. Its website, Foodpanda.in, allows one to place order(s) online; the order is tracked by a call centre. It is modelled on the likes of JustEat.in, DeliveryChef.in, Tastykhana.in and Titbit.com.
Area of Business: Online restaurant aggregator
Started operations: 2012
Gross revenue*: Rs 6-7 cr (‘12-’13)
Break-even: by 2015
Funding :February 2014: $20 million from Phenomen Ventures & others
September 2013:$8 million from iMENA Holdings
May 2013:$25 million from Investment AB Kinnevik and Phenomen Ventures & others
Globally, Foodpanda was incubated by Berlin-headquartered Rocket Internet, an online venture builder and accelerator that has firms such as Jabong and Fab Furnish in its India portfolio. "Each country has its own co-founders, with a global team in Berlin to support individual countries," says Chadda, managing director and co-founder of Foodpanda India.
Across 14 cities in India, the company has partnered 3,000 restaurants, including the likes of Pizza Hut, Subway, Nirula's, Faaso's and Baskin Robbins. Foodpanda.in records about 60,000 visitors a day. Experts say the company might have started with about 100 orders a day; now, it is likely the company records 1,500-2,000 orders a day through the website alone.
"We got eyeballs largely through online marketing - Google displays, Twitter and Facebook," says Chadda. Of course, the concept of ordering food online is still not well-known in India. "But if Domino's can do it for one brand and the aggregation model can work in areas of travel and insurance, it will definitely work in the food sector." The company primarily targets working professionals aged 20-45 years across metros and tier-I & -II cities.
Foodpanda has seen 30-35 per cent month-on-month growth in orders. It expects to see orders rise at least at the food inflation rate of 10-12 per cent. Traffic from the National Capital Region, Mumbai and Bangalore contributes about 60 per cent to Foodpanda.in's overall traffic. The company is relying on increasing internet and smartphone reach to expand in tier-II cities.
It earns commission from restaurants for the orders it takes on their behalf; typically, it is 12-15 per cent. Customers aren't charged a penny. Experts estimate in the first year of its operations, Foodpanda.in facilitated at least 100,000 orders and its revenue was Rs 6-7 crore.
Chadda says, "The organised retail food market stood at Rs 1,000 crore in 2012 and is pegged to grow 40 per cent to Rs 5,000-6,000 crore by 2017. We target to capture at least 10 per cent of the market by 2017."
Foodpanda plans to expand to another six cities in a year. It is targeting about 5,000 restaurants across 20 cities by the end of this year and expects to break even by 2015. Experts say the company expects to record sales of Rs 500 crore in the next five years.
On what has worked in the company's favour, Chadda says, "We relay the order in under two minutes. We make sure we are following up on the order(s) so that it is delivered in less than 45 minutes… that apart, all the big brands in India today are part of the Foodpanda network."
Sasidhar Nandigam, director at Hyderabad Angels, says, "Though the company has gained traction in India, it is early to say whether it will be sustainable and profitable in the medium-to-long term."
As the company's primary competition is orders through phone, Chadda has introduced various innovative features.
For instance, Foodpanda.in saves all your orders, making it easy for you to reorder. You can also save multiple addresses, so that you don't have to relay your address every time you order.
Foodpanda.in also has Android and iOS apps, which have been downloaded 300,000 times. Of the visitors to the website, 18-20 per cent are accounted for by the mobile channel.
How are restaurants chosen? "We have strict quality parameters outlets have to adhere to before we list them; we regularly examine their performance. We remove restaurants from our list if they continue to get poor ratings from users," says Chadda.
Last week, Foodpanda received global funding of Rs 122 crore, or $20 million, from a group of investors, including Phenomen Ventures. With the new investment, the company aims to expand to about 40 countries by March-end. In May 2013, the company secured funding of Rs 152.50 crore from investors, including Investment AB Kinnevik and Phenomen Ventures. "A further $8 million was raised from iMENA holdings in September," Chadda says.
However, challenges abound. "The biggest threat is from the generic listing company that wants to position itself as a one-stop solution for all city-specific information. Hiving off a category into a unique vertical doesn't need any special effort for these companies," says Nandigam.
EXPERT TAKE: Anil Joshi
India is a country of food lovers and tastes & preferences vary across regions. India has a fairy large restaurant sector, worth about $50 billion (Rs 3.1 lakh crore) and growing at 11 per cent.
While the sector has evolved, the delivery chain is very weak. Though customers have several choices, it is a challenge when they have to order food from a local restaurant. The biggest hurdle while ordering food is getting access to restaurants, as either phone lines are busy or one isn’t able to get the contact details of the preferred restaurant(s).
Therefore, there is a need for a platform that enables customers to place orders online, with access to all relevant information such as menu, price and delivery time. Despite such a big restaurant sector, this need was unmet till the online platform was launched. Foodpanda.in is an excellent concept, bringing restaurants on its platform and enabling customers to place orders online, with a pay-on-delivery option. The concept has been well-accepted, as evident from order bookings rising from 50 a day to 1,500 a day.
However, Foodpanda.in needs to expand rapidly, as customers feel starved if they don’t get services across the country. Also, competition can’t be ignored as DeliveryChef.in from Mumbai is expanding reasonably well to other cities. Foodpanda.in should also focus more on user interface and mobile apps (India consumes more data on mobile than on desktop), which will help it tap the growing needs.
With global presence and experience, I am sure Foodpanda will be able to capitalise on this opportunity and offer great options to customers to place orders for yummy food online.
Anil Joshi is an early stage investor