Foodpanda Needs To Slender On Cloud Kitchens As Ola Slashes Investment In It

Key Highlights

 Ola reducing its expenditure on food delivery service, Foodpanda to focus more on its core transportation business.

India’s food delivery market is expected to hit $2.5 – 3.5 billion by end of 2021.

Ola has decided to put $200 million into Foodpanda India to make a successful entry into cloud kitchen space.

Related: Box8 raises $15 million in a series C funding round led by eWTP Ecosystem

The food industry is filled up with astounding news. Same happened in December 2017 when ride-hailing unicorn Ola acquired Germany based online food delivery marketplace Hero’s 95%  in a stock deal to make an entry in the food business in India by launching Foodpanda in India. But Ola has to face lots of obstacles as food tech war is getting more aggressive because of the tight grip of deep-pocketed rivals Zomato, Swiggy, and UberEats. Therefore after a year owing Foodpanda, Ola is reducing its expenditure on food delivery service to focus more in it’s core transportation business besides lending abd digital payments.

According to a report in Economic Times, Foodpanda has gashed its customer acquisition expenses by two-thirds this month. Thus leading to failure of orders by 60%. As according to report Ola is commencing various austerity measures at Foodpanda to focus on cloud kitchen model. It is an innovative initiative by Ola to make a tight grip on the food market. The report also added that Foodpanda will heft Ola’s customer base to enhance its private level brands like Love made, The Great Khichdi Experiment and FLRT.

Related: Swiggy focusing on rapid diversification with the launch of Swiggy XL

Ola has also shifted its previous team members from Foodpanda to enhance its transportation business. Now Ola has decided to put $200 million into Foodpanda India to make its a successful entry into cloud kitchens space. The company has also acquired shuttered food – tech startup Holachef to assist Foodpanda in gaining success in Cloud Kitchen. 

Faasos and FreshMenu companies working on cloud kitchen technology has attained high profit by this model, has motivated delivery marketplaces to launch their own cloud kitchen programmes. Swiggy too has raised $1 billion in funding South African Technology Conglomerate Naspers in December and Zomato has also raised about $210 million from Chinese e-commerce giant Alibaba Groups in October 2018. As according to market reports Swiggy has two private brands The Bowl Company’ and ‘Homely home food’ along with its cloud kitchen initiative ‘Swiggy Access’. 

As according to the conversation with investor ‘The food business in India now is just capital dumping for short term gains, because citizens are making use of services only when huge discounts are offered but take away interests as discounts are removed. Therefore logically battle in the food industry is not worth fighting’.

According to an analysis of Redseer Consulting, India’s food delivery market is expected to hit $2.5 – 3.5 billion by end of 2021. Stay tuned with us to get the latest update related to the food industry.