Ola suspends Foodpanda's food delivery business, trims staff count: report
BusinessToday.In May 22, 2019
Cab aggregator Ola which acquired Foodpanda 18 months ago has suspended the company's food delivery business, sacked around 40 mid-to entry-level employees and ended the contracts of about 1,500 food delivery executives. However, the food-tech vertical of Ola will continue the operations of its in-house brands or cloud kitchens.
"As part of our ongoing business repurposing initiatives, we are focused on building a portfolio of own food brands and curated food offerings through our fast expanding network of kitchens. Many of these offerings are already available in all major cities through the Ola and Foodpanda apps. We continue to invest in expanding our facilities and kitchens, as well as our portfolio of food offerings for customers. We remain committed to our mission of building a superior food experience for millions of our customers," an Ola spokesperson told BusinessToday.In
The move comes amid the company struggling to keep the business afloat since the last couple of months and compete with rivals Swiggy, Zomato and Ubereats.
Both Swiggy and Zomato have been going aggressive in the market putting in money into discount offers and expanding their services across cities.
Reports suggest Ola wants to focus on its cloud kitchen business it launched after Foodpanda took over Mumbai-based food-tech startup Holachef in October last year. At present, Foodpanda owns three private label brands under its cloud kitchen business which include The Great Khichdi Experiment, Lovemade and FLRT.
Ola in the last two weeks alone has dissolved its ground team completely. The entry-level employees were laid off first followed by the on-ground operations team while the company has retained its core operations team comprising senior employees.
Following the suspension of Foodpanda, Ola presently is reportedly in talks with delivery players such as Dunzo and Zomato to relist its cloud kitchen brands.
According to food tech analysts, focusing on in-house brands helps companies achieve higher profit margins as restaurant aggregators have to divide the 40% margins with their restaurant partners. Thus, Foodpanda can get to keep the entire 40% margin and further expand its gain for every order. Swiggy also operates a few of its in-house brands such as Homely and the Bowl Company on the marketplace.
Ola acquired Foodpanda in December 2017 to take on Uber's launch of its on-demand food delivery app Ubereats in India. Ola bought Foodpanda's India business from Berlin-based Delivery Hero Holding GmbH, one of Europe's biggest startups and a leading global online food ordering and delivery marketplace.
The cab aggregator had also launched Ola Cafe (a food delivery service) in 2015 where customers could order through the app and Ola cabs would deliver the order in quick time. However, the company had to shut down the service a year later on account of stiff competition from Swiggy and Zomato.