In another blow to its attempt at food delivery, ANI Technologies Pvt. Ltd-owned ride-hailing player Ola has suspended Foodpanda's food delivery business and has fired around 40 mid to entry-level executives. Moreover, the company has terminated the contracts of the 1,500 strong workforce of delivery executives. Notably, in order to grab a pie of India's growing online food delivery business, Ola had acquired Foodpanda India from Germany-based Delivery Hero Group in December 2017.
According to Mint, most of the restaurants on Foodpanda platform were "unavailable", however, an advertisement of one of its in-house brands is still displayed. Notably, its in-house brands or cloud kitchens will continue to remain in operation. This is the second failure for Ola in the food delivery business, the company had launched Ola Café in 2015 but closed its operations within a year. The development is in contrast with its competitors like Swiggy and Zomato which have been pumping in money into discounts and increasing their operation in cities across countries. In comparison, Foodpanda has been struggling to expand and fight with its competitors.
One person aware of the development said "They (Ola) have realised they can't burn money like Swiggy and Zomato, which is why they only want to do in-house brands. Over the last few months, Foodpanda has been scaling down its marketplace. They have launched a few brands and plan to launch a few more—sort of like Faasos."
Ola is now planning to focus on the cloud kitchen business which was made operational after Foodpanda took over Mumbai-based food-tech start-up Holachef in October last year. It is to be noted that under its cloud kitchen business, Foodpanda owns Great Khichdi Experiment and FLRT. The source further added, "In the last two weeks alone, the company (Ola) has dissolved the ground team completely. The core operations team consisting of senior employees is being retained. The entry-level employees were given intimation first, followed by the on-ground operations team."
After the suspension of its food delivery business, Ola is deliberating with delivery players such as Dunzo and Zomato to relist its cloud kitchen brands. Interestingly, Ola is focussing on in-house brands to achieve higher profit margins. As per food tech experts, a restaurant aggregator has to split the margins as high as 40 per cent with its restaurant partner but if a company is operating through its in-house brand, it can retain entire 40 per cent margin hence increasing overall profit.