Why Foodpanda and OpenRice are losing their appetite for Indonesia

Neither of the two companies are small fish, but they have faced difficulties in Southeast Asia's largest economy, reports Tech in Asia

News that food delivery start-up Foodpanda plans to sell off its Indonesian branch was just making its round, when Daily Social reported that restaurant discovery site OpenRice downscaled its operations in Indonesia.

The Hong Kong-headquartered company is rumoured to have shut its office in Jakarta some months ago, while some employees remain active.

OpenRice and Foodpanda aren’t small fish. So, why are they losing their appetite for Southeast Asia’s largest economy?

One possible explanation is that the rapid ascent of Go-Jek’s on-demand empire in Indonesia makes it more difficult for start-ups in the food space to grow.

Go-Jek is primarily for ride-hailing, but its other pillar is food delivery. Go-Food (Go-Jek’s food arm) might be eating into the market shares of both Foodpanda and OpenRice.

With a fresh $550 million in the war chest, Go-Jek is gaining momentum.

Steven Kim, co-founder of restaurant discovery site Qraved, has another explanation.

“The challenge for them (Foodpanda) was that they never managed to get user discovery into their platform,” Steven says, adding, “Nor did the quality of service go up with (the) assistance of tech.”

If Foodpanda is trimming down in Indonesia because its model doesn’t do well in 'small basket markets', what about OpenRice?

Restaurant discovery comes with its own problems. To make it worthwhile for restaurants to pay for premium listings, you need substantial traffic. The model already has two big players in Indonesia: India-born Zomato and local start-up Qraved. Abraresto, another restaurant discovery site in Indonesia, had to shut down because it wasn’t able to meet targets and ran out of funds. OpenRice might be facing a similar issue.

This is an excerpt from Tech in Asia. You can read the full article here