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Rival now owner of Foodpanda


Calcutta, Dec. 10: Berlin-based online food takeaway service Delivery Hero has acquired competitor Foodpanda, a sign of further consolidation to fend off competition in Europe’s sought-after food delivery business.

Delivery Hero, which was valued at 2.8 billion euros in its last funding round in June, said in a statement on Saturday that it had signed a definitive agreement to buy Foodpanda, also based out of Berlin.

Both the food delivery start-ups are backed by German e-commerce company Rocket Internet, which invested 800 million euros in Delivery Hero last year and 300 million euros in Foodpanda, which focuses on deliveries in eastern Europe, West Asia and Asia, including India.

In exchange for all its shares in Foodpanda, Rocket Internet will receive newly issued shares in Delivery Hero, increasing its stake in the latter to 37.7 per cent.

The companies did not disclose the price of the buyout, which comes at a time Foodpanda is struggling with sales in Asia. Reports suggest that the start-up failed to attract buyers at a $10-15 million valuation for its India business and closed its operations in Indonesia.

Saurabh Kochhar, co-founder and chief executive officer of Foodpanda India, confirmed the development to The Telegraph but refused to comment further.

In February this year, the start-up had hit 70,000 deliveries a day across the country, the highest till date. It also claims to have tie-ups with over 12,000 restaurants across 150 cities in the country. Globally, it is active in 40 countries.

Foodpanda India’s loss widened four-fold to Rs 142.6 crore in 2015-16 because of higher investments in technology, delivery and marketing. The company had registered a loss of Rs 36 crore in 2014-15.

“The losses are on account of higher investments in technology, delivery and marketing. We are running our services at operational profitability since February 2015,” a company spokesperson said recently.

Dip in popularity

At present, about 40 per cent of the orders are delivered by Foodpanda and the rest by restaurants. This is a jump from December 2015 when only 25 per cent of the orders were delivered by Foodpanda, the company said.

However, Bangalore-based Swiggy, backed by SAIF, Accel and Norwest Venture Partners, is now more popular than Foodpanda.

Swiggy has its own delivery fleet and claims to have an average delivery time of 37 minutes.

Foodpanda, on the other hand, uses its fleet only for express services for delivery within 45 minutes.

Foodpanda reportedly has a delivery fleet of 1,500 people, comprising a a mix of payroll and part-time employees who come during peak hours for deliveries. Swiggy did not divulge the details of its delivery fleet size.

According to analysts, the food delivery business is highly unstable as the arrival or service rates of orders are not uniform.

The delivery time keeps on changing as also the work of field executives depending on the demand, creating high odds for unprofitability.

Mumbai-based food delivery start-up TinyOwl shut its operations across India, except Mumbai, earlier this year and was later acquired by Bangalore-based Roadrunnr, also in the same business. Another player, Spoonfed, shut its operations in Bangalore to start services in Dubai.

Industry insiders claim in the last three years, over 400 restaurant delivery start-ups have come up in India.

Source: Telegraphindia