After Zomato and TinyOwl, Foodpanda lays off 15% of workforce in India

After Zomato and Tinyowl, it’s now the turn of their rival Foodpanda to layoff about 15 percent of its workforce (about 300 employees) in an effort to control burn rate, automate operations, and reduce focus on deliveries in India.

India’s food tech sector is seeing massive churn.

Foodpanda India confirmed it has reduced its earlier manpower of 2,200, which is a cut of about 15 percent. About 300 people have got fired in this exercise.

“Foodpanda has managed to reduce manual intervention and achieved about 98 percent automation rate in order processing. We have therefore reduced the overall workforce by about 15 percent,” Saurabh Kochhar, CEO of Foodpanda India tells Tech In Asia.

India’s food tech sector is seeing massive churn with bigger players reducing operations to fewer cities as investors are looking at the sector with cautious eyes. Companies such as TinyOwl, Zomato, and Foodpanda thus have reduced focus on deliveries, outsourced it to vendors, and cut marketing expenses, including cashbacks which they doled out in the earlier part of 2015. Other players such as Dazo and Langhar have shut shop in recent past. Spoonjoy was acquired by Grofers. TinyOwl and Zomato have laid off over 650 employees together.

Foodpanda will compensate sacked employees and help them find jobs, Kochhar adds.

A US$14 billion market to conquer

Foodpanda, which is present in over a dozen countries, has raised about US$310 million in funding since 2012 from its prime backer Rocket Internet, along with Goldman Sachs. India was a key market where investments were made. The online food services market is valued at over US$14 billion in India.

“We have had to take some difficult decisions in 2015 but we believe them to be necessary steps on our path to become sustainable and profitable within the targeted timeline. While we have introduced many new services and experiences this year, we have limited our delivery services to selective restaurants partners,” Kochhar adds.

Foodpanda got a lot of flak in the media, this year due to fake orders being generated on its platform, high burn rates, and issues between top management due to acquisitions of Just Eat and TastyKhana, which operated on different models. FoodPanda India co-founders Rohit Chadda and Amit Kohli, along with CEOs of JustEat and TastyKhana who joined the company, have all left.

Despite the internal turbulence, Foodpanda claims to have achieved 10-fold growth this year in India.

A difficult year

Germany-based Rocket Internet brought in Saurabh Kochhar, an ex-Mckinsey consultant who was running Rocket-backed PrintVenue in India, to run the India operations.