Food delivery applications continue to burn more money than they earn and Foodpanda is the latest to join the chorus. The company has reported a 230% jump in its net losses and while every major player including Zomato and Swiggy have reported mounting losses, Foodpanda’s cash burn rate is among the highest in Indian startups, business intelligence platform Tofler reported. However, there is a common thread running in the losses of food aggregators. For Foodpanda, “The significant increase in expenses from the last year is contributed by discounts provided and delivery charges incurred,” Anchal Agarwal, CEO, Tofler said in the report. For Swiggy too, the jump in losses was due to a multi-fold increase in delivery costs, among other major reasons, she had said earlier.
The last fiscal 2018-19 had not been benevolent to food aggregators. Swiggy’s losses mounted by 500% for fiscal ending 2019 with the net loss to the tune of Rs 2,346 crore. On the other hand, Pisces Eservices owned Foodpanda’s losses stood at Rs 756 crore against its total revenue at Rs 82 crores.
Ola’s Foodpanda pull back
Cab hailing application Ola had earlier severed its ties from Foodpanda’s business and went on instead to build its own cloud kitchens. “This decision now makes sense in light of the surging expenses the company seems to have incurred in the previous year. They have also infused $100 million in form of debt in the company,” Anchal Agarwal said.
Foodpanda has incurred delivery charges of Rs 267 crore against its revenues of Rs 82 crores. “The discount expenses were to the tune of Rs 137 crore (that’s nearly 1.5 times of revenues),” Anchal Agarwal said.
Meanwhile, the online food delivery business has boomed in India with the entry of several players such as UberEats, Swiggy and Zomato, among others. In fact, Jeff Bezos’ owned e-commerce behemoth Amazon is also expected to foray into the food delivery business soon, considering the huge potential in the Indian market.