Foodpanda Begins Operating in 13 More Cities

Foodpanda Begins Operating in 13 More Cities

HIGHLIGHTS

  • Cities include Jaipur, Chandigarh, Kanpur, Lucknow, Ahmedabad, etc.
  • Foodpanda wants to get an additional 60,000 delivery partners on board
  • Foodpanda now operates in 20 cities

As part of its aggressive expansion across the country, food delivery platform Foodpanda on Thursday announced its entry into 20 cities. In addition to the 7 cities where Foodpanda had an active delivery partner network in place, 13 cities have gone live starting today with Foodpanda’s delivery partner network on ground. The app has started operations in Jaipur, Chandigarh, Kanpur, Lucknow, Indore, Ahmedabad, Nashik, Nagpur, Mysore, Bhubaneswar, Guwahati, Visakhapatnam and Coimbatore.

With Foodpanda’s robust delivery partner network on ground, consumers and restaurant partners will benefit from a seamless experience, it said in a statement.

“We are thrilled to expand Foodpanda’s delivery network to 20 cities across the country. We are in the midst of a fast-paced nationwide expansion with an ambition to serve a billion Indians. We are confident that our cutting edge technology and unique local insights will make Foodpanda, India’s largest and most preferred food experience platform,” said CEO at Foodpanda India, Pranay Jivrajka.

“Being a part of the Ola platform, Foodpanda will explore opportunities to synergise its services and efforts of delivering superior food experiences to cater to a wider pool of customers across these cities,” added Jivrajka.

Foodpanda had also announced its intent to on board an additional 60,000 delivery partners on to its network by the end of October. Tens of thousands of delivery partners have already been on boarded over the past month with Foodpanda expecting to achieve this target well ahead of time.

 

[“Source-gadgets.ndtv”]

Foodpanda fires over 500 employees, will stop own delivery in six cities

In 2014-15, Foodpanda recorded a loss of Rs36 crore, on a revenue of Rs4.8 crore. Photo: Ramesh Pathania/Mint

In 2014-15, Foodpanda recorded a loss of Rs36 crore, on a revenue of Rs4.8 crore. Photo: Ramesh Pathania/Mint

Mumbai: Online food ordering start-up Foodpanda India has laid off close to 500 employees, according to two people aware of the development.

The layoffs ordered on Monday covered all business segments—sales, marketing, vendor service, customer delight, business intelligence, automation, on-boarding and an in-house call centre in Gurgaon.

Starting in January, Foodpanda will also stop food delivery in six cities, including Kolkata, Chennai, Nagpur and Coimbatore, the two people said on condition of anonymity. Mint could not ascertain the other two locations.

Foodpanda delivers 20% of its total orders on its own. The rest is outsourced to vendors, who pick up and deliver food. Or the restaurants listed on the site do it themselves.

Foodpanda is one of the world’s largest online food ordering marketplaces, present across India, Brazil, Russia, South-east Asia and Eastern Europe. It has raised almost $310 million since its launch in March 2012 from the Samwer Brothers of Rocket Internet and Goldman Sachs, a global bank.

“As a result of the many technological innovations, we have achieved over 98% automation in order processing. This resulted in lesser manual interventions, thereby leading to surplus manpower, which was not benefitting the business or our people’s careers,” Saurabh Kochhar, chief executive officer (CEO) of Foodpanda India, said in an emailed reply. “Therefore, unfortunately, we had to let go of around 250-300 people from our total manforce.”

“Re-organization of the business was done across every aspect from technology to processes to customer service. This has been a painstakingly difficult decision-making phase,” he added. “We continue to stand by our people and are doing the best we can to mitigate the fallout.”

While Foodpanda has disputed the number of people it has laid off, the two people cited earlier said the number is closer to 500. “The unit economics of this business has gone for a toss,” said one of the two, a Foodpanda executive. “We have burnt through a lot of money this year on marketing and hiring; so, it is not surprising that Rocket Internet and Goldman Sachs have cracked the whip.”

“So we were 180 people in February 2015. Today, we are at 1,300-odd people. That’s how fast we have grown. So these are not exact numbers but roughly we have fired 60 people in sales, 80 in vendor service, 10 in marketing, 20 in customer delight, 12 in finance, 5 in on-boarding, 25 in automation and about 250 people from the in-house call centre.”

In the six cities where Foodpanda will shut operations, the move will affect delivery boys who are not on the company’s payroll, the executive said. The delivery is outsourced to contractors.

Mint reached out to Ralf Wenzel, co-founder and CEO of Foodpanda (global). In an emailed reply, he said that Foodpanda has “reduced overall work force by about 15% over the last months”.

On whether this is a sign of trouble for the food tech space, Wenzel said it isn’t. “Ninety-nine per cent of the food-ordering market in India is still offline; only a small fraction is online. It’s still a very early market and we are exposed to one of the biggest opportunities in Internet overall. There is hardly any other industry that will see as much growth as online food ordering.”

Have the terminated employees been compensated? Is Foodpanda helping them land their next assignment? This part, too, is unclear.

“We have honoured our contracts with each and every employee,” Kochhar said. “Affected employees will be provided with due remuneration and will be further assisted to get a foothold in the industry by setting up a platform to help them discover a plethora of job options.”

The Foodpanda executive said it wasn’t entirely true. “The staff in Chennai is getting three months’ notice period pay. That’s because of the flood situation there,” said the official. “But not in any other locations. Those employees will get their December salary and a full and final settlement in January.”

In 2014-15, Pisces eServices, which operates Foodpanda, recorded a loss of Rs.36 crore on revenue of Rs.4.8 crore.

Wenzel, though, believes that Foodpanda’s future in India is bright. “Despite the very early stages, Foodpanda has achieved profitability across many countries already,” he said. “And even in India we have achieved positive unit economics across many cities and business segments. Marketplace business generally requires many years to turn profitable. We are happy to see this happening even faster at Foodpanda.”

In September, Mint wrote about multiple flaws in the culture and processes at Foodpanda.

[“source-Livemint”]

The link between Capricorn eServe and former Foodpanda MD Rohit Chadda

A file photo of Rohit Chadda. Documents in Mint’s possession show that Capricorn’s story started in February 2015 when Chadda decided to set up the company as a partnership firm. Photo: Ramesh Pathania/ Mint

A file photo of Rohit Chadda. Documents in Mint’s possession show that Capricorn’s story started in February 2015 when Chadda decided to set up the company as a partnership firm. Photo: Ramesh Pathania/ Mint

Mumbai: A follow-up investigation by Mint into the lapses and frauds at food-tech start-up Foodpanda has revealed that the former managing director Rohit Chadda may have channelled money to a company promoted by his mother and another relative.

The company, Capricorn eServe Pvt. Ltd, was a call centre and all told, Foodpanda, at Chadda’s instance, transferred Rs.2.8 crore to it over a period of six months.

Chadda denied any wrongdoing. “I have no interest in the firm and none of the partners is a member of my family,” he said in an emailed reply.

Foodpanda executives Mint spoke to during an earlier investigation into the start-up said they doubted the antecedents of Capricorn. Back then, Gagan Vashistha, a director on the board of the company, confirmed Capricorn’s association with Foodpanda.

“Yes, we provide 200 people to them and we have been working with them for the last five-six months.” On the allegations, Vashistha had this to say: “Whoever is giving you this information is misleading you. We started as a partnership firm on 15 March and registered on 30 July. Yes, it is true we were one of the highest paid among vendors. But all processes and checks were followed.”

That doesn’t match with the facts that have since come to light and which highlight the www (Wild Wild West) spirit that continues to exist in India’s start-up ecosystem, where entrepreneurs are still coming to grips with building organizations and following rules (some do a better job of this than others).

Documents in Mint’s possession show that Capricorn’s story started in February 2015 when Chadda decided to set up the company as a partnership firm. Foodpanda’s orders had indeed grown and there was a genuine need to bring in a call centre. Chadda sensed an opportunity, but he knew that registering the firm in his name was fraught with risk. So he reached out to a relative, Rajat Mathur. Mathur is employed as associate director (supplier management) at Carlson Wagonlit Travel in Gurgaon. Next, Chadda got his mother Sunita Chadda on board.

Despite repeated attempts, Sunita Chadda did not respond to phone calls. WhenMint reached out to Mathur on 28 October, he said he was busy and could not spare the time to talk. He instead asked that an email be sent to him. Mint sent a detailed questionnaire to Mathur on 28 October. Despite following up several times, Mathur did not respond to the email.

Let’s explain a complex relationship here: Sunita Chadda has two sisters—Savita Sethi and Suman Patney. Patney’s daughter Teena is married to Mathur. Simply put, Mathur is Rohit Chadda’s brother-in-law.

In an emailed reply, Rohit Chadda denied that he had anything to do with Capricorn.

“The company that carried out outsourcing work for Foodpanda was a partnership firm called M/S Capricorn eServe with three partners Gagan Vashistha, Rajat Mathur and Teena Mathur,” he said. “I have no interest in the firm and none of the partners is a member of my family. As per Companies Act of 1956 this was not a related party transaction.”

Documents in Mint’s possession prove otherwise. Anyway, back to the story.

While Mathur was comfortable lending his name, he had little time on hand to set things up. Enter Vashistha, a former colleague. The two had worked together at Interglobe Technologies in 2011-12. Vashistha’s job was to set things up and he was kicked about it. Sometime in March, he joined the team. A partnership deed was drawn—Mathur and Sunita Chadda picked up stake of 42.5% each. Vashistha took 15%.

Now, intent takes you only so far. Early in April, the folks started discussing money. Where’s the money to invest?

Rohit Chadda came up with a brilliant plan. Forget seed capital. How about an advance? From who else but Foodpanda. After all, Chadda was the MD, right?

On 21 April 2015, Pisces Eservices Pvt. Ltd (the official entity which does business under the name Foodpanda) issued a cheque of Rs.40,84,512 in favour of Capricorn. In return, Capricorn issued a few invoices—salary of 100 employees at Rs.28,500 per month. Then, salary of team leaders at Rs.33,500 per team leader. Then, quality analysts at Rs.45,000 per quality analyst. Tax deducted at source and hiring charges. Total bill: Rs.40,84,512.

Needless to say, Capricorn was flush with cash. With three directors. No company to speak of. No office. And no service rendered to Foodpanda. All it had was a name, a partnership deed and the most important thing, a bank account—No: 100405500242 in ICICI Bank Ltd.

Mint has copies of the bank statements.

Business kicked off immediately. Vashistha started hiring and within a few days sent over some 25 new recruits over to Foodpanda for training, because Capricorn still didn’t have an office. By April-end, Capricorn found an office in Gurgaon while it continued to hire.

Everything was going swimmingly. While it is still not clear as to how many people joined Capricorn, Foodpanda kept the money tap open. On 23 May, Foodpanda transferred another Rs.24,94,688 to Capricorn. Meanwhile, Mathur and Sunita Chadda kept withdrawing money. In May , Mathur withdrew Rs.1,72,167. And Sunita Chadda Rs.1,52,167. In June, another big chunk of money came in from Foodpanda: Rs.41,59,335. Sunita Chadda’s needs grew bigger. The same month, she withdrew Rs.2,46,318.

In June, a competitor of Capricorn got wind of the hanky- panky. Etisal International was another back-end service provider for Foodpanda. It was being paid Rs.20,000 per person per month, Rs.8,500 (per person) less compared with Capricorn. Etisal wanted the disparity to be addressed. By then, Rohit Chadda had already resigned and was serving his notice period at Foodpanda. Senior Foodpanda officials Saurabh Kochhar, current chief executive officer of Foodpanda, and Shray Gulati, chief transformation officer, got involved to sort out the mess, but Etisal wasn’t ready to back down. It knew about the Chadda family antecedents of Capricorn and then some more.

Capricorn did not have the online service provider (OSP) licence from the department of telecommunications to carry out business as a call centre. Etisal threatened to go public with the information.

Foodpanda did not reply to the specific question on Etisal. Mint tried reaching out to Etisal, but the company’s landline number wasn’t working. An email sent to Vaibhav Kaushal, assistant general manager at Etisal, on 28 October, did not elicit any response. In his emailed response, Rohit Chadda said that there were several issues with Etisal, which resulted in disruption of Foodpanda’s operations multiple times. “Foodpanda had been facing continuous issues with Etisal as a call centre partner,” he said. “And their team just wasn’t competent enough. In addition, there were multiple occasions when Etisal failed to pay salaries… Since they were not being able to handle quality of the current team strength, there was no question of allocating them more resources so foodpanda had to look for a replacement. Given foodpanda needed to increase our call centre strength urgently due to an imminent TV marketing campaign, foodpanda decided to get a third outsourcing partner and slowly phase out Etisal which is why their management was unhappy.”

What about Capricorn’s OSP licence? “At the time of initiation, foodpanda was informed that the license was applied for. However, as soon as foodpanda found out of the absence of necessary licenses, the contract was terminated,” he added.

Anyway, as often happens in such cases, the issue with Etisal was managed.

But Rohit Chadda had been warned and he swung into damage control mode. “Everything had to be changed,” said a former Foodpanda official who requested not to be identified because he didn’t want to get into any legal trouble with either Foodpanda or Chadda.

“In flat 15 days, and you know how these things work, Capricorn was incorporated as a private limited company. The directors changed. The mother was out. And so was the brother-in-law. Instead they were replaced by Ashna Babbar (Rohit Chadda’s fiancée, whom he has since married) and Teena Mathur (Rajat Mathur’s wife and Rohit Chadda’s cousin). Don’t ask me how this happened but yes it did. Except the signing authority continued to be with the mother and brother-in-law as nominees,” the former Foodpanda official said.

Soon after, Capricorn started life as a private limited company, with new directors (except Vashistha) and a new bank account—No: 100405000487 at ICICI Bank. An amount of Rs.46,53,093 was credited to this account from the earlier account. Foodpanda continued transferring money to Capricorn. In the following two months, August and September, Capricorn received a total of Rs.1.3 crore. Both Rajat Mathur and Sunita Chadda continued withdrawing money from this account too.

Even as all this was happening, Rohit Chadda exited Foodpanda on 30 July. And just about then, Capricorn’s fortunes turned for the worse. Early in September, Foodpanda served a termination notice to the firm. “So it was like, we don’t need your services,” said the former Foodpanda official quoted above. “So there was an option, either we take your site and people or one month notice and end of contract and end of story. Capricorn chose the second option.”

Vashistha started hunting for new business. He reached out to Indiamart, but the company wasn’t interested. Employees were already on their way out and there was little to sustain operations. Starting 30 September, Vashistha stopped coming in to work.

Whatever happened to the money?

Some went in salaries of employees and other office expenditure. But a large chunk of the money, in bits and pieces, was withdrawn by Rajat Mathur and Sunita Chadda. According to the bank documents accessed by Mint, in September alone, the two of them withdrew almost Rs.50 lakh from the company. On 9 October, Mathur deposited Rs.29,93,175 back in the account. The same amount was withdrawn in favour of a company called Capricorn Serve on 16 October.

Mint reached out to Vashistha with a detailed set of questions. He said that he resigned from the company on 9 October. “I worked with Capricorn eServe with honesty and sincerity. But I was never involved with finances so (I have) no clue about it.”

Ralf Wenzel, global CEO of Foodpanda, in response to a query on whether whatever transpired at Capricorn was known to Foodpanda and Rocket Internet, the venture capital firm where Foodpanda was incubated, said in an email: “Foodpanda decided to review the business relationship with Capricorn eServe several months ago. We terminated the contract with the company in September this year as a consequence. Rohit Chadda left Foodpanda India in July this year (2015). Foodpanda is fully committed to ensure compliance in all its business activities and has mandated an independent consulting firm to conduct a compliance-ensuring audit of its Indian operations.” The firm is PriceWaterhouseCoopers.

In addition to his responses, Rohit Chadda said: “Please also note that I was not the whole and sole in charge of operations at Foodpanda and a CEO had been appointed in March 2015.”

The publication of this article was delayed after Rohit Chadda filed a civil suit for defamation and obtained an interim injunction from a civil court against HT Media Ltd, publisher of Mint, and the reporter, restraining the story’s publication. The interim injunction was subsequently vacated by the civil court.

[“source-Livemint”]

Foodpanda changes India strategy in revival bid

Foodpanda, which until now has been driven by technology developed at its headquarters in Berlin, has also started to build its products locally. 

Photo: Ramesh Pathania/Mint

Foodpanda, which until now has been driven by technology developed at its headquarters in Berlin, has also started to build its products locally. Photo: Ramesh Pathania/Mint

New Delhi/Mumbai: Online food ordering company Foodpanda is revisiting its India strategy by outsourcing delivery and is also looking to start its own kitchen, a comparatively higher-margin business, as it seeks to bolster its local business.

After being hammered by several issues related to fraud and systemic failure and a senior management churn, Foodpanda is now making several changes to bring in more automation and reduce manual interventions in the food-ordering process, global chief executive officer Ralf Wenzel said in a telephone interview from Berlin on Wednesday.

Wenzel said the company had turned operationally profitable in India as well as globally. The parent has also committed to increase its investments in India in the next couple of months.

“Given that now we have a healthier base, have better gross margins, have new technology… we have decided to increase our investments in the country,” Wenzel said without disclosing the amount of new investments that will be pumped into the country. This could mean a 50-100% increase in the company’s marketing budget over 2015, he said.

According to Wenzel, 2016 is the year for Foodpanda to globally focus on the path to profitability.

At this point, 30% of Foodpanda’s food orders are delivered by its own personnel, while the rest are outsourced to restaurant or third-party logistics firms, Wenzel said.

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The company also claims to have dramatically reduced the discounts it offered during 2015.

“Today 80% of the new customers that we are acquiring are coming to us organically… share of paid marketing has become very less,” he added.

Among other things, Foodpanda has become more selective about which restaurant it partners with, Wenzel said. The company has also started offering customers curated dishes produced in joint kitchen facilities in partnership with select restaurants, he added

Foodpanda, which until now has been driven by technology developed at its headquarters in Berlin, has also started to build its products locally.

“Now we have local teams who interact with the restaurants and clients on ground and then create local products. This makes our products more flexible and execution is faster,” said Wenzel.

According to Wenzel, the biggest costs in the business till now have been call centres and delivery costs; processes are being automated to reduce expenses.

In December, Mint reported that Foodpanda India had fired over 500 employees across all business segments—sales, marketing, vendor service, business intelligence, automation, on-boarding and an in-house call centre in Gurgaon.

Foodpanda also stopped food delivery in six cities, including Kolkata, Chennai, Nagpur and Coimbatore.

Rocket Internet-backed Foodpanda is one of the world’s largest online food-ordering marketplaces, present across India, Brazil, Russia, South-East Asia and Eastern Europe.

The company has raised about $310 million since its launch in March 2012 from the Samwer Brothers of Rocket Internet and investment bank Goldman Sachs.

Foodpanda, one of the early movers in India’s food-ordering space, is yet to establish itself in a significant way. It faces tough competition from Indian rival Zomato, Bengaluru-based Swiggy and Mumbai’s TinyOwl.

As it struggled to scale up its business and grappled with several internal issues, Foodpanda was reported to have been in talks with Zomato and Swiggy for a potential sale.

Foodpanda’s Wenzel denied this.

“We were not looking to sell the business… it (news) came as a surprise to us. India is one of the key priority markets for us and it has become a blueprint market for whatever experiments we are making. Now we are operationally positive and it gives us opportunity to continue to invest in the country.”

In February, Rocket Internet sold its food takeaway businesses in Spain, Italy, Mexico and Brazil to Just Eat for $140 million, according to a TechCrunch report.

Brazil and Mexico accounted for about 5% of Foodpanda’s global revenue in 2015, according to Rocket Internet.

“We have decided to focus on large food-delivery markets and the markets that have a very short path to profitability,” said Wenzel.

“It is all about survival right now… whether they (food tech companies) survive by flipping the company or by turning profitable. Capital efficiency is important as the markets are down, liquidity is down. So yes, right now, the focus for everyone is towards operational profitability. Whether they have achieved it or not is something that needs to be seen,” said Kashyap Deorah, serial entrepreneur and author of The Golden Tap, a book on India’s hyper-funded start-up ecosystem. Deorah worked with online restaurant reservation service OpenTable for nearly two years in the US.

[“source-Livemint”]