Karachi: Foodpanda Pakistan CEO Nauman Sikander Mirza has said that he expects the company to reach breakeven in 2023.
In a recent interview dawnThe CEO of the online food and grocery delivery platform said the company has been growing its top line at an annual rate of over 50 per cent for the past three years.
“We haven’t hit break even yet. Pakistan is geographically spread. So the expansion is not as cost-effective as it is in other countries,” said Mr. Mirza, who founded The Food Connection, an online food guide in 2011, which was later adapted into eToA.
Meanwhile, European multinational delivery hero launched Foodpanda in Pakistan in 2013, acquired eToA in 2015 and has retained Mr Mirza as CEO since then.
Assures that the riders’ experience will be very different with the platform in the coming months
Mr Mirza declined to reveal key figures such as the bottom line or the number of monthly orders. However, he added that the company’s Gross Merchandise Value (GMV) – a widely used ecommerce indicator that measures the value of products processed for sale by an app/website – is around Rs 40 billion per year. This is not the company’s net revenue, although a major part of it comes from actual sellers of food delivered through online platforms.
Foodpanda has received criticism on social media for charging small restaurants extremely high commissions, while keeping fees low for more established ones.
“That is not true. Our commission rates range from 22-23 per cent to 29-30 per cent.”
Multinational brands such as KFC, Subway and McDonald’s are top-notch and pay the lowest commission to bring their “brand bridge”. Tier II players include major national brands such as OPTP and Broadway Pizza. The third tier includes brands that operate three to four restaurants in a city. The last level consists of “singleton units” from which the highest commission is charged.
More than 20,000 restaurants and home chefs in 50 cities deliver their meals across Pakistan through Foodpanda’s fleet of 50,000 riders.
Mr Mirza estimates that nearly a quarter of all restaurants operating in the country have signed up for their online food delivery platform. Foodpanda’s main competitors in the aggregator category include Carrom Now, Cheetah and Jovi. He claims that the company’s share in the aggregators market is between 60 and 65 per cent. “In terms of total food sales, we constitute 2-4 pcs (including dine-in revenue). In home-delivery pie of food, we should have 10-15 pcs portion,” he said.
Despite the apparent presence of Foodpanda riders on the streets of all major cities, the Berlin-based holding company’s financial accounts barely make a reference to the global food delivery platform’s local operations.
“We (the rest of the world) are years behind when it comes to ordering food. Bangkok has a population of eight million and 100,000 restaurants as opposed to a total of 90,000 restaurants across Pakistan,” he said.
Foodpanda’s competitors had approached the Competition Commission of Pakistan (CCP) a few months back, alleging that it was using its dominant market position to eliminate competition. He alleged that its loyalty agreements with restaurants seeking exclusivity were creating a monopoly in the food delivery segment.
“Out of the 20,000 restaurants we have worked with, we have signed loyalty agreements with around 150. We did this after getting formal approval from the CCP,” he said, noting that these restaurants have signed up so that they can pay 1-1.5 per cent less than the standard commission rate.
labor issues
Another allegation that is constantly leveled against the company is that it pays its riders a small amount and treats them poorly if they are robbed or injured in accidents.
“No rider ever says he didn’t get paid,” he said, meaning such complaints come from customers. “If you pay people less, they will stop working for you altogether. We don’t have that problem. We are very fair employers when it comes to paying money,” he said.
According to Mr. Mirza, a typical rider earns an average of Rs 30,000 per month if he works eight hours a day, six days a week. He said that if he is a “dedicated” rider, he could earn twice that amount working the same number of hours.
The rider gets a fixed amount on every order, irrespective of its size. “Since we optimize distances, a rider is able to place two to three orders in an hour. Some of our good riders do up to 30 orders in a day,” he said.
As for compensation in case of snatching or accident, Mr Mirza said the reality is “50:50” as the company “could do much better”.
“We have worked extensively on this issue for the last two, three months,” he said, noting that the family of a rider now gets Rs 500,000 in case of death. “In the next two to three months, you will see that the riders’ experience will be very different,” he said.
Published in Dawn, October 17, 2021