The Fall of Foodpanda and Rise of Swiggy and Zomato

When we are hungry all we want to do is “Just eat”.

Reminds us of Snickers that says “hunger ache acho ko badal deta hai”. But little do we know the brief history of how "JustEat" became Foodpanda (which was subsequently acquired by Ola as Ola Foods). The idea of Just Eat germinated in the hungry stomach of Young Ritesh Dwivedy on a winter evening at his office in Bangalore in 2005. He walked down to the office cafeteria in search of food and to his dismay found that to be closed. He came back to his desk to look for some places to eat on the internet, but could not find one.

Being an IIT graduate and having worked with few start-ups and watching them grow over the years, somehow made him act on his start-up impulse. And that’s how HungryBangalore.com came into existence.

The start-up DNA ran through Ritesh Dwivedy's veins!

But the question was to ensure if the plan was worth the time & effort.

How Did It Start?

To cross-check the idea Ritesh used to stand outside the gates of many big companies with questionnaires in his hand, trying to figure out from the people if there was actually a need in the market for his "food startup" idea. Voila! Around 80% of the people who took the survey thought online food ordering would be a very good idea. And hence, the seeds for HungryZone were sown with the hope that the idea might actually just work out

The Challenging part was the investment and the funding.

The HungryZone foundation was laid on whatever personal funds the founders could manage from their own bank balances. They used whatever resources they had, both financial and otherwise – and managed to successfully come up with HungryZone.

By August 2008, HungryZone became a registered company under Achindra Online Marketing Pvt. Ltd. At the time, HungryZone managed to partner with over 400 restaurants altogether. It was then that the first round of funding was raised by the company from the Indian Angel Network. This new investment capital helped to gradually expand into other cities by further developing the business on a larger scale. Though the company was still looking for more investment and funds in order to operate at a higher scale with ease.

JustEat's Acquisition of HungryZone

During that time Just Eat was the world’s biggest online food ordering portal, with its headquarters in UK. They were looking for partners and India was an interesting place for them. HungryZone was doing fairly well at that time and an upcoming player among the local food startup players (with Bangalore as the main focus market).

It was a great opportunity for both the companies to join hands.

Hence in January 2011 Just-Eat, UK’s leading online portal for ordering Food Company bought a 60 percent stake in HungryZone, which was rechristened as Just Eat India. Thereafter, the company expanded aggressively and established branches in Mumbai and Delhi in the same year.

With a large base of partners already covered, JustEat India started expanding into Tier-2 cities as well. TastyKhana and Foodpanda were newer entrants giving stiff competition and were well-funded.

The Twist & Consolidation in Foodtech Space

Foodpanda was a global player (under the RocketInternet group). Foodpanda.in, which launched in India in May 2012, operated in 39 countries across five continents. With sound funding & robust backing, Foodpanda first acquired TastyKhana (in Nov 2014) and then acquired JustEat India (in Feb 2015). Together with TastyKhana and Just Eat, the brand was now present in more than 200 Indian cities and partnered over more than 12,000 restaurants.

As soon as the market started expanding Foodpanda started facing new challenges.

In the process and progress of aggressive expansion, Foodpanda may have made such a blunder because it did not want to lose customers. Customers and restaurants often complained about Foodpanda's lack of communication. Customers would often call restaurants to inquire about the delayed delivery, but the restaurants were unaware that consumers had put on order the app.

The Demise (of HungryZone, JustEat & Foodpanda)

Foodpanda's loss can be attributed to several factors, including fake restaurants and orders, miscommunication, technological issues, unstructured business models, and a lack of ownership. The company's workers were unaware of the ongoing issues, they were getting calls from clients, and if they did not deliver food, they were given free vouchers.

Because these types of free vouchers were lucrative to consumers, the number of fake customers (& orders) also increased. The flaw was that neither the business nor the restaurants followed up with the customers. It was a deal between the customer and the restaurants (when a customer chose a restaurant from their website). Foodpanda was utterly unaware of the order. Several restaurants and consumers took advantage of Foodpanda in this way, contributing to the company's demise.

Stupidity Called Ola (and Their Desire to do Everything)

The taxi services Ola wanted to step into the food delivery business once again. On December 19^th, 2017, Ola announced a deal of acquiring Foodpanda’s India Business from its German parent company Delivery Hero Group in an exchange of Ola stock for an undisclosed amount.

Ola’s founding partner took the position of interim CEO of the Foodpanda delivery business. Ola invested around $200 million into FoodPanda. But to everyone's dismay, Ola Foods was also shut down within few years of its operation (albeit they made a comeback in the form of cloudkitchen with multiple brands like Khichdi etc.)

Summary

HungerZone better known as JustEat strived hard against the odds to make it work. Founders thought that merger and acquisition would be a deal-breaker. But it was not. One acquisition led to the other. Eventually the companies could not stand the changing environment and technologies. Coupled with managerial and leadership issues (as documented here https://www.livemint.com/Companies/hBXzRHzuRDW1GuUa1tPaqN/The-link-between-Capricorn-eServe-and-former-Foodpanda-MD-Ro.html) like siphoning of money, zero accountability, further eroded Foodpanda's market share. Foodpanda subsequently lost the game to their rival Swiggy And Zomato.

https://thedigitalyug.com/startup/foodpanda-case-study-how-the-billion-dollar

https://www.financialexpress.com/industry/sme/once-a-waiter-this-entrepreneur-now-digitises-cafeterias-for-top-multinationals/1510584/

https://yourstory.com/socialstory/2021/08/biogas-plant-ngos-scale- https://www.livemint.com/technology/amp?utm_pageloadtype=scroll

https://blog.ipleaders.in/everything-need-know-ola-foodpanda-merger/