Foodpanda Business Model | How Foodpanda Makes Money

Krishna kumar Krishna kumar
Feb 15, 2021 10 min read
Foodpanda Business Model | How Foodpanda Makes Money

Foodpanda is a online food delivery marketplace that connects users to thousands of local food points. It maintains one of the most prominent apps for ordering from restaurants. Users can browse through various menus and place orders for home delivery/pick-up at the best prices. And it takes just a few clicks. Foodpanda offers you food point menus, customer reviews and more for over 5000 restaurants spread across 40+ Indian cities.

So how does Foodpanda make money in the fiercely competitive food-delivery segment? Let's find out by decoding Foodpanda's business model.

Foodpanda was launched in Singapore in March 2012 and expanded to 16 countries by the end of the year. It then expanded to seven more countries and had its presence in 23 countries by February 2013.

The company aimed for its reach in 40 countries in Asia, Europe, Latin America, the Middle East, and Africa by Q1 2014 and achieved the objective. A New York Times article said Ralph Wenzel's company Foodpanda is proof that rapid expansion plans are achievable with the right strategies.

Foodpanda Marketing Strategy
Foodpanda Business Model
Foodpanda Revenue Model
Foodpanda - Expenses
SWOT Analysis Of Foodpanda

Foodpanda
Foodpanda

Foodpanda Marketing Strategy

Promotion

Digital marketing plays a huge role in Foodpanda's marketing strategy. The company periodically introduces food festivals, offers, and incentives for its customer base through email marketing.

Foodpanda uses social media platforms to launch its advertisements. It has a Facebook page for regular updates and interactions as well as to maintain visibility and brand value. The company has thousands of followers on Twitter.

Foodpanda is known for its quirky taglines, the latest one being "take the first bite". And these taglines play a critical role in Foodpanda's promotional campaigns. Foodpanda's promotional programs have been seen on television, radio, cinema, magazines, newspapers, train hoardings, bus hoardings, and in shopping malls.

The company struck a deal with the Indian railways in December 2015. Under this arrangement, it allows travelers to order food online using the Indian railway's platform.

Price

Foodpanda has become immensely popular and this has been possible due to its pricing policies. It has adopted a value-added pricing policy wherein it provides quality food items to customers at a fair price.

Foodpanda's customers are given incentives such as discounts and special offers. This treatment ensures customer retention and allows Foodpanda to stand out in the crowded food delivery segment.

Distribution Network

Foodpanda is owned by Germany-based 'Delivery Hero SE' and lets customers order food from restaurants and other dining places through its website and mobile app. Its network comprises 40+ countries. Foodpanda has partnered with an estimated forty thousand restaurants all over the world.

Foodpanda started in Singapore and was present in Latin American, Eastern European, Russian, African and Asian countries such as India, Bangladesh, Thailand, Singapore, Malaysia, and Pakistan by the start of 2016.

Foodpanda is one of the most popular online portals in India for ordering food. The four thousand restaurants that FoodPanda has partnered with in India have delivery points located in 40+ Indian cities such as Hyderabad, Mumbai, Bangalore, Chandigarh, Pune, and Delhi.

Foodpanda's distribution network includes more than two thousand partners such as Mast Kalander, Beskin Robbins, Nirula, Subway, and Pizza Hut.

Experience

Foodpanda ensures a healthy and delectable eating experience without the hassle of traveling or pre-planning. It connects customers to the restaurants of their choice.

The first step is to locate restaurants that service your area. You do this by selecting your location on Foodpanda's homepage. Once the list of restaurants is displayed, pick a restaurant and go through its menu.

You then choose your meal which gets added to the cart. Once your cart is ready, enter your delivery location and follow the payment instructions. You will then receive an SMS on your order confirmation along with the estimated delivery time.

Foodpanda also lets you see and upload reviews on restaurants. Customers can comment on a number of features like delivery, sales process, overall impression, and taste.

Foodpanda Business Model

Foodpanda Business Model
Foodpanda Business Strategy

Foodpanda maintains a website and a mobile app that people can use to order food from their favorite restaurants and eateries.

People can search for restaurants that deliver food to their addresses using Foodpanda's website/app. After choosing the restaurant, users can select their meals which are then added to the transaction cart. Once the meals are finalized, people can check out their cart and pay via online payment gateways or through cash-on-delivery.

Once the order is confirmed, a notification goes to the restaurant. Every restaurant that partners with Foodpanda gets access to a 'merchant app'. The restaurant confirms the order and prepares the customer's meal.

As soon as the order is confirmed by the restaurant, a 'delivery signal' is sent to all delivery partners via Foodpanda's 'delivery partner app'. The partner who accepts the request (delivery signal) is entrusted with the responsibility of delivering the customer's food.‌‌

The delivery partner arrives at the restaurant to pick up the prepared meal and delivers it to the customer. ‌‌Customers can track the entire process right from food preparation to delivery on Foodpanda's app/website. Live location tracking is a well-known trend in the food delivery business and Foodpanda offers the same.

How Foodpanda Works - Foodpanda Business Model
How Foodpanda Works
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Foodpanda Revenue Model

Registration Fees Charged From The Restaurant‌‌

Foodpanda charges a registration fee from the restaurant to add the latter on its website/app. The restaurant (once added by Foodpanda) becomes visible to customers searching for local restaurants. The registration amount ranges between $100 to $150.  It is a one-time fee.

Commission From Restaurant ‌‌

Foodpanda charges commission from restaurants on every food order they receive through its platform. The commission is generally between 15% and 25% inclusive of all taxes. The commission is decided considering the restaurant's location, the restaurant's dependence on Foodpanda, and the number and kinds of orders.

Delivery Fee From Customers‌‌

There is a delivery fee for each order that a customer places on the Foodpanda app. Apart from this fee, there are other taxes that customers have to pay.

‌‌Foodpanda is a marketing platform for many restaurants, particularly newcomers. Restaurants can increase their visibility by registering on Foodpanda. They can also pay a certain amount to advertise their brand on the app.

Affiliate Income‌‌

Foodpanda also makes money by offering suggestions on the credit cards of various banks. Moreover, banks send out discounts and special offers on their cards to encourage transactions. Foodpanda collaborates with these banks for affiliate marketing.

Foodpanda Revenue Model
How Foodpanda Makes Money
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Foodpanda - Expenses

  • Development and maintenance cost of its online ordering system. The system comprises Foodpanda's website, merchant app, customer app, delivery partner app, and the backend setup for managing everything.
  • Salaries and provisions for full-time employees.
  • Salaries and incentives for distribution partners.
  • Administrative costs.
  • Customers are given benefits in the form of offers.
  • Returns and refunds.
  • Miscellaneous expenses.

SWOT Analysis Of Foodpanda

Swot Analysis of foodpanda

Strength Of Foodpanda

Excellent Platform

Foodpanda is known for its robust and user-friendly website and mobile app. Customers can use these mediums to order meals without any hassle.

They can browse from an extensive list of restaurants. Moreover, customers can track the entire process from placing of the order to receiving the delivery.

Online Ordering

Foodpanda accepts orders through its website and mobile application.  It connects customers and restaurants over the internet.

Investment

Foodpanda has raised $318 million of venture capital. It raised nearly $20 million in initial funding from Rocket Internet and investment AB Kinnevik in the year 2013.  

During the same year, iMENA Holdings invested approximately $8 million. Foodpanda also received another $ 20 million in the year 2014. Goldman Sachs also invested approximately $100 million in Foodpanda. It shows how confident investors and VCs are about Foodpanda's success and growth.

Strong Brand Name

Foodpanda was taken over by the firm 'Delivery Hero' in the year 2016. Delivery Hero manages several international brands. It handles Foodora, HelloFood, Delivery Club, and many others besides Foodpanda. Hence, Foodpanda is under the umbrella of a strong brand.

Global Operations

Foodpanda has footprints in Eastern Europe, Middle East, and Asia.

Global Re-branding

In the year 2017, Foodpanda underwent re-branding with its logo being changed from orange to pink. The iconic panda remains at the forefront of its logo.

Quick Delivery

Foodpanda is known for facilitating quick deliveries so that customers enjoy piping hot meals.

Great Customer Support

Foodpanda provides excellent customer support. It keeps experimenting with food menus and consistently partners with new restaurants. Therefore, customers can always expect something new from Foodpanda.

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Weakness Of Foodpanda

Orders From Nearby Restaurants

Orders are available only from restaurants that are located in the same location as the delivery address. This restricts the customers from trying out various restaurants.

Tap On Free Delivery

The quantity required for free delivery is at times way more than what one asks for or can afford.

Coverage

Foodpanda doesn't cover most of the cities completely.

Opportunities For Foodpanda

Growing Market

Foodpanda competes in a segment that continues to grow. Hence, there is immense scope for improvement.

Customer Expansion

Foodpanda should tie up with new restaurants and update its website/app for attracting foodies.

Embrace Customer Loyalty Programs

Foodpanda may establish customer loyalty programs to retain customers. These programs could provide specially curated offers and discounts.

Threats For Foodpanda

Increasing Competition

The list of startups and established companies that are present in the online food-delivery segment is increasing with each passing day.

Changes In Economic Conditions

Economic changes and volatility can crush even the best. Foodpanda needs to build resilience to withstand rough times.

Ease Of Visiting Nearby Restaurants

People at times prefer to go to a nearby restaurant rather than ordering online. This is one of the biggest threats to Foodpanda considering its business model.

Conclusion

Foodpanda is making great strides. The team at Foodpanda is leveraging social media platforms to the fullest to engage customers. It has achieved considerable growth through email marketing, social marketing, and mobile marketing. If Foodpanda continues to innovate and improvise, it won't be long before it dominates the online food-ordering and delivery segment.

Frequently Asked Questions

What is the business model of Foodpanda?

People can search for restaurants that deliver food to their addresses using Foodpanda's app. After choosing the restaurant, users can select their meals which are added to the transaction cart. Once the meals are finalized, people can check out their cart and pay via online payment gateways or through cash-on-delivery.

Once the order is confirmed, a notification goes to the restaurant. Every restaurant that partners with Foodpanda gets access to a 'merchant app'. The restaurant confirms the order and prepares the customer's meal.

As soon as the order is confirmed by the restaurant, a 'delivery signal' is sent to all delivery partners via Foodpanda's 'delivery partner app'. The partner who accepts the request (delivery signal) is entrusted with the responsibility of delivering the customer's food.‌‌

The delivery partner arrives at the restaurant to pick up the prepared meal and delivers it to the customer. ‌‌Customers can track the entire process right from food preparation to delivery on Foodpanda's app/website.

How does Foodpanda earn money?

  • Registration Fees From The Restaurant‌‌ - Foodpanda charges a registration fee from the restaurant to add the latter on its website/app. The restaurant once added by Foodpanda becomes visible to customers searching for local restaurants. The registration amount ranges between $100 to $150.  It is a one-time fee.
  • Commissioned From Restaurant ‌‌- Foodpanda charges commission from restaurants on every food order they receive through its platform. The commission is generally between 15% and 25% inclusive of all taxes. The commission is decided considering the restaurant's location, the restaurant's dependence on Foodpanda, and the number and kinds of orders.
  • Delivery Fee From Customers‌‌ - There is a delivery fee for each order that a customer places on the Foodpanda app. Apart from this fee, there are other taxes that customers have to pay.
  • Advertisement - ‌‌Foodpanda is a marketing platform for many restaurants, particularly newcomers. Restaurants can increase their visibility by registering on Foodpanda. They can also pay a certain amount to advertise their brand on the app.
  • Affiliate Income‌‌ - Foodpanda also makes money by offering suggestions on the credit cards of various banks. In addition, banks send out discounts and special offers on their cards to encourage transactions. Foodpanda collaborates with these banks for affiliate marketing.

Why is Foodpanda successful?

Foodpanda is successful because of the following reasons :

  • Excellent Platform.
  • Online Ordering - Foodpanda accepts orders through its website and mobile applications.  It connects customers and restaurants.
  • Investment - Foodpanda has raised $318 million of venture capital.
  • Global Operations - Foodpanda operates in various countries in Eastern Europe, Middle East, and Asia.
  • Global Re-branding - In the year 2017, Foodpanda underwent re-branding with its logo being changed from orange to pink. The iconic panda remains at the forefront of its logo.
  • Quick Delivery - Foodpanda is known for facilitating quick deliveries so that customers enjoy piping hot meals.
  • Good Customer Support - Foodpanda provides excellent customer support. It keeps experimenting with food menus and consistently partners with new restaurants. Therefore, customers can always expect something new from Foodpanda.

Which company owns Foodpanda?

Foodpanda was taken over by the firm 'Delivery Hero' in the year 2016.

How foodpanda works?

Foodpanda is a food delivery marketplace that connects users to thousands of local food points. It is one of the most prominent apps for ordering from restaurants. Users can browse through various menus and place orders for home delivery/pick-up at the best price. And it takes just a few clicks. Foodpanda offers you food point menus, customer reviews, and more for over 5000 restaurants spread across 40+ Indian cities.

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