For a while now, food delivery startup Foodpanda’s Viman Nagar office in Pune has felt more like a fortress than your run-of-the-mill workplace. At its entrance, a group of bouncers stand guard. Their task is simple: keep the company’s delivery executives—yes, its own employees—from entering the building. The measure was taken after protesting delivery personnel stormed Foodpanda’s Mumbai and Pune offices, roughing up the employees who worked there.

The protests were the result of an increasingly familiar phenomenon in the gig-economy—a surplus of ambition and a  shortfall of follow through. In this case, Foodpanda had outraged its delivery executives after it promised riders big money—around Rs 40,000-50,000 a month—but failed to make weekly payments to delivery executives. According to some delivery staff The Ken spoke to, payments were either delayed or blocked altogether. Angered, they decided to protest.

To be fair, this has happened to other, similar startups in the past. Uber, the now-defunct TinyOwl, and Foodpanda’s owner Ola have all faced vandalism from irate drivers/delivery executives. Foodpanda is merely the latest entrant to the infamous club.

For Foodpanda though, the timing could not have been worse, coming less than a month after its India operations were snapped up by ride-hailing platform Ola in a distress sale. It was something of a miracle moment for the failing food delivery platform, besieged as it was by its younger, more successful rivals Swiggy and Zomato.

Ola’s acquisition—a stock deal for somewhere between $30-50 million—was not just a stay of execution, it was a resurrection. It also declared it had set aside $200 million for its new acquisition, talking up its plans to turn Foodpanda around.

Fresh funding

According to industry sources, Ola is already in the market to raise a fresh round to further bankroll Foodpanda. A source mentioned that Ola is out looking for new investors for the fresh round

Less than a year on from these hope-filled tidings and Foodpanda is back in the muck. The platform’s discount-fuelled quest for growth has backfired spectacularly. Sure, it provided the spike in volumes that Foodpanda craved, but the company simply wasn’t prepared.  “What has happened is that, because of the deals being offered, Foopanda scaled intensely. Their demand scaled a lot more than what their operational infrastructure could take care of,” says a source who was briefed on Ola’s strategy for Foodpanda. A former Foodpanda delivery coordinator in Pune confirmed the same. Even orders prepared by restaurants, the source reveals, weren’t getting picked up.

“Foodpanda assumed that if it received one million orders a day, for example, it would need only 500,000 people on the ground. But the challenge is that out of that 1 million orders, some 500,000 orders happen during lunch time only, within a span of 3-4 hours.

AUTHOR

Salman SH

Salman has around four years of experience reporting primarily on consumer internet, startups, and the telecom sector. Previously, he worked with the financial newspaper Mint, reporting on startups and consumer internet trends. Prior to this, he worked with MediaNama and NextBigWhat. At The Ken, Salman will look at startups, technology trends, and the government policies shaping up around them. Loud metal, moshpits, and local gigs are he what he lives for.

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