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Foodpanda’s losses widen by massive 232% in FY19

The company is cutting down on investments in food delivery and pivoting to a cloud-kitchen model.

Foodpanda’s losses increased by a whopping 231.83% year-on-year at Rs 756.42 crore in the year to March 2019. Revenue from operations grew by a mere 12.72% at Rs 81.31 crore in FY19, according to the company’s RoC filings sourced from business intelligence platform Tofler.

The firm’s expenses shot up to Rs 838.20 crore in FY19 from Rs 162.64 crore in FY18, up 415.37%.

Foodpanda’s burn rate of Rs 756 crore over revenues of `82 crore is one of the highest among Indian start-ups, said Anchal Agarwal, CEO, Tofler. The company incurred heavy expenses due to discounts and delivery charges. While delivery charges were Rs 267 crore, discount expenses totaled nearly Rs 137 crore, almost one-and-a-half times of revenues, analysts at Tofler said.

Earlier this year, Ola-backed Foodpanda’s CEO Pranay Jivrajka said the food delivery firm is focusing on creating a portfolio of its own brands.

In an interview to a local newspaper, Jivrajka said the company has taken the “shift from a food delivery company to a food-first company”.

The company is cutting down on investments in food delivery and pivoting to a cloud-kitchen model.

Swiggy and Zomato, backed by deep-pocketed Naspers and Ant Financial, respectively, lead the country’s food delivery market.

While Swiggy so far mopped up close to $1.5 billion in funding, Zomato raised close to $800 million in funding till date. Zomato’s CEO Deepinder Goyal recently said the firm is looking to raise up to $600 million in fresh funding.

Foodpanda’s decision to build cloud kitchen brands “makes sense in light of the surging expenses”, Tofler’s Agarwal said.

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Source: Financial Express