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Update: Ola denies shutting Foodpanda’s delivery biz, says it’s ‘repurposing’ business to focus on kitchens

Update at 3 pm: Ola has denied reports that it is suspending its food delivery business, and issued the following statement to MediaNama:

As part of our ongoing business repurposing initiatives, we are focused on building a portfolio of own food brands and curated food offerings through our fast expanding network of kitchens. Many of these offerings are already available in all major cities through the Ola and Foodpanda apps. We continue to invest in expanding our facilities and kitchens, as well as our portfolio of food offerings for customers. We remain committed to our mission of building a superior food experience for millions of our customers

Today at 11:30 am:

Ola has suspended Foodpanda’s delivery business and has laid off 40 employees and 1,500 delivery executives, the company is now switching to in-house brands and cloud kitchens only, as per multiple reports (see here and here). Foodpanda was reportedly unable to continue competing with heavyweights Zomato and Naspers-backed Swiggy, both of which have been burning cash by offering discounts and expanding services to more cities. It is worth noting that in December, Foodpanda claimed to have 60,000 restaurants listed and servicing in 100 cities. Between September and December 2018, it had expanded to roughly 60 locations. It reported losses of Rs 228 crore for FY17-18, up by 80% from losses of Rs 45 crore the previous year.

What now? The current idea at Foodpanda is to switch focus on cloud kitchen business including its own brands, instead of being a marketplace. It currently owns four private labels – the Great Khichdi Experiment, FLRT, Lovemade, and Grandma’s Kitchen – and lists over 50 cloud kitchens. These operate in Bangalore, Delhi, Pune, Mumbai, and Chennai. Its reportedly in talks with concierge service Dunzo and Zomato to relist its cloud kitchen brands, focusing on in-house brands is way to achieve higher profits as the aggregator platform retains 40% of the cloud kitchen’s earnings. It is even hiring for the cloud-kitchen segment, per Business Insider.

What we know from before: At its peak in September 2018, Foodpanda was processing 3 million orders a month, while Zomato and Swiggy were processing 30 million per month. Ola had acquired Foodpanda India from German parent DeliveryHero in December 2017 and invested Rs 400 crore in the company. Ola first food delivery initiative ‘Ola Cafe’ had failed and shut operations within a year of launch.It even appointed new leadership for strategy and marketing.

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UberEats is still around . . : The food delivery business in India has a fourth wheel – UberEats. Parent company Uber has tried to sell off its UberEats business in India to either Zomato and Swiggy, but has failed to get a buyer.

Edit: The headline has been changed following a statement from Ola.

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