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That Foodpanda is shifting its R&D centre to Singapore, with plans to hire 500 IT and product people, is a significant change in tune, signalling a commitment to improve on localisation this time around. It wants to develop its own mobile wallet, another former employee said, one that will also allow users to spend Foodpanda credit at hawker stalls and food courts. But its efforts with the wallet come late and will “hardly be a game-changer” for the firm, a former employee said.

As of now, there’s little consensus on the number of Southeast Asian countries in which Foodpanda commands a clear market leadership position. By some accounts, Foodpanda leads only in Malaysia and the Philippines, falling behind Grab or third players in other markets. In other industry insiders’ assessments, Foodpanda leads in Thailand and Singapore.

The companies themselves each highlight different strengths. Gojek claims leadership by numbers of orders, Grab by GMV, and Foodpanda by how quick the delivery is.

New battlefronts

Grab and Gojek’s financials haven’t been made public, but both firms have suggested that food delivery is among the best-performing business units in their multi-service offering.

Grab said food and financial services now make up over 50% of its GMV. However, achieving operational profitability is easier said than done especially in price-sensitive markets like those in emerging Southeast Asia.

Presently, customer acquisition costs still outweigh income opportunities. “Promotions trigger consumers to order food online as of now,” Mevira Munindra, the head of operations at market intelligence firm IDC Indonesia told The Ken. That they’ll stick around after promotions end is not guaranteed.

The three-way competition flaring up between Grab, Gojek, and Foodpanda across many markets in the region has the potential to trap all players in another few years of expensive customer acquisition.

Grab and Gojek have the advantage of being able to keep logistics costs low with their vast delivery fleets, and they have cashless payments systems with high adoption rates. But operating multiple services at once also comes with risks, as any of these business units may soak up resources and attention.

Foodpanda’s primary service is food delivery. With its dedicated fleet and single-service model, it can focus spending on features such as cloud kitchens, batch deliveries, and smart recommendations. This may bring a competitive advantage, Munindra said. But Foodpanda has also started adding ancillary services like groceries delivery to improve fleet utilisation in off-peak hours.

There is also a rapidly developing consensus that cloud kitchens are game changers for the industry. They represent another avenue to trim costs and their benefits range from “A to Z through the entire value chain,” one industry insider said.

They’ll enable delivery platforms to plan logistics more efficiently and allow F&B operators to prepare food at lower costs. In theory, this will help trigger consumer demand and result in a win-win-win situation for consumers, restaurants, and delivery platforms.

Cloud kitchens have opened up a whole new battlefront.

Effective Utilization

Foodpanda aims to add “over 100 in-house kitchens” in 2020, its CEO Angele said, up from just a handful now. Gojek operates about 10 cloud kitchens but it has plans to grow the number rapidly, says Catherine Hindra Sutjahyo, the head of Gojek’s food delivery arm. Gojek also recently entered into a partnership with Rebel Foods, facilitating the latter’s entry into the Indonesian market—together, they intend to set up 100 kitchens. Grab, which has about 40 cloud kitchens and is planning to set up more, is partnering with Indonesia’s F&B startup Yummy Corp.

Yummy Corp also offers its professional kitchens for rent. In addition, it is partnered with Everplate—the Indonesian arm of Uber founder and former CEO Travis Kalanick’s startup CloudKitchens—to operate Everplate’s kitchens.

Kalanick’s startup, on the other hand, is testing these kitchens as an independent business model. The company has also launched in Singapore under the name Smart City Kitchens.

With at least three ambitious players in the market—besides several others—further consolidation is likely, industry insiders say. Few markets will be able to sustain more than two large delivery platforms in the long run.

In the coming years, whichever delivery platform manages to squeeze the most efficiency out of working with cloud kitchens could have a real advantage in this market.

Foodpanda believes that with its single-minded focus on food, it is most likely to get there first.