Ola expects orders to fall by 60%, but business to grow more efficiently.

Ola to cut cash burn in Foodpanda focus on private labels and cloud kitchen
Atom FoodTech Monday, January 28, 2019 - 16:10
Written by  S. Mahadevan

At a time when the FoodTech industry is growing aggressively, the major players in the industry are burning cash to be on top of the industry and acquire more customers. At a time like this, Ola-owned Foodpanda is looking to step away from this convention and reduce its cash burn.  According to an Economic Times report, the company make its operations a lot more efficient and focus on its own private labels and fall back on its cloud kitchen.

Ola must have also found that the orders keep flowing as long as there is an offer going and the moment the offer is withdrawn the numbers fall off. And this phenomenon is not new to the food order delivery business alone. Many popular FMCG brands struggle with the dilemma whether to continue with the offers they use to promote their products among the customers. Some of these brands are forced to keep some offer or the other perennially to ensure the sales volumes do not drop.

Foodpanda will now adopt a strategy where its order numbers might keep coming down. But with a drastic cost-reduction programme being implemented Ola believes it can cut down on its losses. Ola has developed The Great Kitchen Experinment, Lovemade and FLRT brands or private labels and these will be the new engines of Foodpanda’s growth, going ahead. The reduction in the number of orders, the major yardstick the food order delivery business is measured by, the drop could be as high as 60%.

This is also part of Ola’s plan to de-priorities the foodtech arm in terms on investment. Ola will now focus on scaling its payments, lending and core transportation portfolio. Ola has identified that its key focus areas will remain the mobility business where it sees larger opportunities for SBUs like scooters and electric vehicles. Besides these, Foodpanda has also been leveraging Ola’s reach to reach out to more audience. With these objectives, the company has shifted some of its executives who had earlier been seconded to Foodpanda, back to the main business operations.