Unit economics turning profitable: Foodpanda

The company's average transaction size sits anywhere between Rs 400-600, and says it has been able to charge a 15-25% cut on every transaction from its restaurant partners

Online food ordering and delivery service provider Foodpanda India says it now makes a profit on every order, claiming to go against the norm of massive cash burn that the foodtech sector has been plagued with.

With a little over 70,000 daily orders, the Rocket Internet-owned entity says it’s the largest in the segment. The average transaction size is between Rs 400 and Rs 600, and it says it has been able to charge a 15-25 per cent cut on every transaction. “We are profitable on every single order that we do, and we’ve done it over the past year because we’ve focused on customer experience and because we’ve automated 99 per cent of the orders. We also have fantastic customer retention rates,” said Saurabh Kochhar, chief executive officer.

Foodpanda recently dismissed close to 15 per cent of its staff, citing higher automation in its ordering process. It claims 99 per cent of all its orders are without any human intervention, making a chunk of its earlier employees redundant.

Having a presence in close to 200 Indian cities and partnering with about 12,000 restaurants, the company says the scope for expansion in terms of adding inventory is slim. Instead, it will look to go deeper in each of the cities it is present in, with plans to double its 1,200-strong delivery staff over the next year.

“We’re over 2,000 people. Earlier, we were around 2,300,” said Kochhar. “We’re already present in 150-200 cities, so we’re not willing to expand in the next year or so.”

In 2014-15, their loss was Rs 36 crore on revenue of Rs 4.8 crore. Since then, it claims to have grown by 10 times and while still not operationally profitable, it has set a target of 2019 to do that.

The food ordering and delivery space has been one of the worst hit in the recent slump that hit the Indian start-up investment market. Both rivals, Zomato and TinyOwl, have in the recent past dismissed employees to curb cash burn. While at first investors pumped in huge amounts of funding, they later cracked the whip on these companies to reduce the cash drain, fuelled by massive discounting and marketing.