After Zomato and TinyOwl, Foodpanda Fires Nearly 300 Employees

Foodpanda’s layoff comes after increased competition from Zomato and other emerging nimbler startups.

Foodpanda India, the local unit of Rocket Internet-backed online food ordering venture Foodpanda, has laid off close to 300 employees, according to a report in The Economic Times. This comes after TinyOwl and Zomato too laid off people in bulk following intense competition in the food delivery space.

Foodpanda had an employee strength of 2,200 prior to the workforce reduction.

The layoff covered all key business segments – sales, marketing, vendor service, customer delight, business intelligence, automation, on-boarding and an in-house call centre in Gurgaon.

While we continued to invest in processes and technology we also had to take some difficult decisions but we believe them to be necessary steps on our path to become sustainable and profitable within the targeted timeline.

Saurabh Kochhar, Chief Executive, Foodpanda India in a press release

The startup will also stop food delivery in six cities, starting January, including Kolkata, Chennai, Nagpur and Coimbatore.

Foodpanda delivers 20 percent of its overall orders on its own. The rest is either outsourced to vendors or done by the restaurants themselves.

While Foodpanda said 15 percent of the workforce (250-300 people) have been fired, sources quoted by Livemint peg the number at close to 500.

The unit economics of this business has gone for a toss. 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.

Foodpanda executive to Livemint

Foodpanda, which is active in more than 30 countries globally, faces increasing competition in India’s piping hot food-ordering and delivery industry, which is pegged at nearly Rs 95,000 crore, according to industry reports.

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

Foodpanda is part of the Global Online Takeaway Delivery group created earlier this year by Rocket Internet, and counts Goldman Sachs as an investor. Globally, the company has raised $310 million since its inception in 2012, with Rocket holding a majority stake.

There has also been ongoing speculation that the Berlin-based incubator and investor was strongly considering putting up a number of its top ventures in India on the block, according to an earlier report in The Economic Times. Rocket Internet, however, had declined to comment on that report.