Cost-cutting is at top of the menu for Ola at Foodpanda

India’s largest ride-hailing app Ola has more than halved its cash burn at its food business Foodpanda and plans to make its private label brands the cornerstone for growth, even as the food tech war gets more aggressive, driven primarily by deep-pocketed rivals Swiggy, Zomato and UberEat’s continued discounting, three people directly aware of the company’s plan told ET.

According to the new mandate, Foodpanda will focus on running the business more cost efficiently by focusing on its own private labels and cloud kitchens which include The Great Khichdi Experiment, Lovemade and FLRT brands, and continue to leverage Ola’s base.

“In January, Foodpanda cut marketing and customer acquisition costs by two-thirds, in line with Ola’s de-prioritisation plan for the business in terms of investment. The internal expectation is orders will fall by 60% but business will grow more efficiently,” said one person, adding that Ola plans to focus on scaling its payments, lending and core transportation portfolio, which includes scooters, international business and electric vehicles. “These verticals alone are large markets, and play naturally to Ola’s strengths,” said another top executive from Ola.

Some of the product team employees who were shifted from Ola to Foodpanda last year have been moved back to Ola, a third person said.

A restaurant and cloud kitchen that ET spoke to confirmed that they saw visible order spikes in Foodpanda during the time dishes were discounted, but customer orders were not consistent on other days. “We typically see a spike in Foodpanda orders during an offer. But as offers pull back, volumes drastically fall. For Swiggy and Zomato too there is a spike when on an offer, but there is a base consistency in terms of order volume even without offers,” said a cloud kitchen startup.

Food tech players including Swiggy, Zomato, UberEats and Foodpanda currently do about 2 million orders a day on average.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/cost-cutting-is-at-top-of-the-menu-for-ola-at-foodpanda/67717969