Delivery Hero, the Berlin-based parent of Foodpanda, is in talks with potential buyers to sell the online food delivery giant’s operations in Singapore, Cambodia, Laos, Malaysia, Myanmar, the Philippines and Thailand, the company was quoted by Reuters as saying on Wednesday.
Like Hong Kong and Taiwan, foodpanda in Bangladesh and Pakistan are excluded from the list of markets Delivery Hero wants to exit.Foodpanda Bangladesh declined a request from The Business Standard yesterday to comment on why the Bangladesh market is excluded and what would happen to Foodpanda Bangladesh, as it was not in a position to comment on speculations.
Some analysts said because of the huge cumulative losses in Bangladesh and Pakistan, the business might not attract buyers. In that case, some even feared a shutdown ultimately, just like its competitors UberEats, Shohoz foods in recent years and Hungry Naki a few months ago.
After the three players’ exits, home-grown Pathao remained the lone competitor of Foodpanda in the food delivery business, while its on-demand grocery delivery business was competing with the online grocery pioneer Chaldal.
Another group of tech analysts said Delivery Hero might have been counting on the market leadership by far in Bangladesh, Pakistan, Taiwan and Hong Kong markets as it might help improve profitability at some point amid less competition.
In the Asian markets, which Delivery Hero selected for the planned exit, foodpanda faces stiff competition that hurts profitability.Foodpanda that reached every district town in Bangladesh after the pandemic boom—transforming over 50,000 restaurants and retail businesses digitally and engaging over one lakh registered freelance riders—had to burn a lot of cash to claim the growth and market leadership.
According to Delivery Hero annual statements, Foodpanda and its other wings in Bangladesh together incurred a cumulative loss of more than €74 million, equivalent to over Tk850 crore, over the 2016-2022 period.Of course, 2022 was the worst year that contributed to nearly one-third of the cumulative losses.
The Ukraine war not only hurt the inflation-hit consumers’ spending ability and confidence, but also sharply pushed the interest rates across the globe higher to put an end to the era of abundant cheap money that was also flowing across the tech industry as venture capital.Global investors became conservative in pouring millions or billions of dollars into startups that show little sign to grow without burning cash.
Food delivery orders per day roughly halved in Bangladesh nowadays, from the pandemic peak level.Like other tech firms, Delivery Hero was focusing on reaching profitability while maintaining growth for the sake of investors’ confidence, according to Reuters.
Delivery Hero as a Group has reached an adjusted profit before interest, tax, depreciation and amortisation (EBITDA) in the first six months of the year, although it did not quantify it, after a loss of €323 million in the same period a year earlier, Reuters reported.
