E-mails sent to Foodpanda remained unanswered, while a company spokesperson declined to comment on the issue.
Another restaurant owner in Pune, Swaty Kumar, said Foodpanda had decided to sell her food at extremely low prices. The orders spiked to almost four times during the period but the payments have been deferred for these orders, said Kumar, who runs Mughlai restaurant Riwayat.
She claims more than 200 orders are pending payments, and calls and emails on the vendor support line have gone unanswered. Kumar also said that several orders which were cancelled by users on Foodpanda have not been compensated for, unlike how its rivals Swiggy and Zomato do.
Experts point out that the flurry of investments in the online food ordering business is pushing companies
to offer heavy discounts, in order to grow their user base. Moreover, growth has led to a lack of delivery partners in the market, causing a massive spike in their compensation.
“There has been a lot of money that has flown in recently in all the top food delivery companies
and everyone is eyeing growth at this point. To achieve it everyone will use the tools that are available, which I see as a good sign,” said Saurabh Kochhar, co-founder and former chief executive officer, Foodpanda.
However, with fast paced growth the propensity of committing mistakes is also high. A similar scenario was seen in the food ordering business post a bust in 2016 and even in India’s ride hailing space where drivers staged massive protests once incentives paid out by Uber and Ola began drying up.
“There is a lot of capital and hence a lot of open-handedness about spending. However, none of the food delivery platforms is working with their fullest efficiency at this point,” said Devangshu Dutta, chief executive of management consulting firm Third Eyesight. He maintains that food ordering is essentially a logistics business where efficiency in the long term will trump heavy spending in the short term.
Foodpanda isn’t the only company in this space that has begun splurging money. Bengaluru-based Swiggy, after raising $100 million in fresh funding in February from lead investor Naspers and Chinese online-to-offline platform Meituan-Dianping, has scaled up promotions on its platform. Its rival Zomato too has begun spending heavily on marketing and discounting following a $150 million investment from Alibaba affiliate Ant Financial.
Foodpanda was acquired by ride hailing giant Ola in December last year in an all-stock deal valuing the ailing food ordering business at close to $30 million. At the time, Ola had also committed to invest $200 million in Foodpanda to make it India’s leading online food ordering business.