Project

Presentation on
Foodpanda
Pakistan
Problems Faced by
the company
By: Ghulam
Mustafa (27297)
Who Are we?

• Food Panda Pakistan is an online food delivery

system founded in 2016 in Pakistan, that provides
customers with a convenient platform to order food
from a wide range of restaurants, home-based
kitchens as well as groceries from panda mart.
• Today, Food Panda Pakistan has an inventory of over
15,000 restaurants and home-based kitchens in
Pakistan, along with 54 pandamarts across the
country.
• We are having sort of a monopoly in the Pakistan
market with no such competition.
• Food Panda Pakistan is a part of the Delivery Hero
group, one of the leading global online food ordering
and delivery marketplaces.
A bit about our Parent
company: Delivery Hero
• Delivery Hero is a German multinational online food-delivery
service based in Berlin, Germany. Founded in 2011, the company
operates in 70+ countries internationally in Europe, Asia, Africa,
Latin and South America, and the Middle East, and partners with
1Million+ restaurants.
• Delivery Hero has been listed on the Frankfurt Stock Exchange
since 2017 and is now part of the MDAX stock market index
• We are in Africa, Americas, Asia, Europe, Middle East and North
Africa with different brand names: Foodpanda, talabat, Glovo,
Hungerstation, InstaShop ETC.
A bit about online
delivery systems
• The key players in the online food delivery system are Uber Eats, delivery
hero, Zomato, and many others across the world
• The growth of the online food delivery system is due to various factors
such as convenience, competition, customer demand, and the impact of
COVID-19.
• The online food delivery segment is one of the largest segments in e-
commerce, and it has reached new heights in the past few years.
• By 2024, the international food delivery segment is expected to increase
from 136.4 US$ to 182.3 billion. By 2025, the online food delivery market is
projected to reach US$ 192.16 billion, with an aggregate growth rate of
11% respectively.
Some Financials:

• Currently the stock price is Euros 37.87

• As of 2022, Gross margin: 26.02%, Operating margin: -26.54%,
Net Profit margin: -34.86%, Return on Investment: -13.19%.
• Cash Flow/Share: -2.68, Revenue/Share: 33.34, Operating
Cash Flow -51.37%.
• As for 2022, total assets of the company were Euros12703.7
Million, liabilities were Euros 7229 Million and equity
were: Euros 547 million
• Total Debt to Equity is 139% meaning company has 1.39
debt for each part of equity
 Issues that are faced by the company:

Dependence upon certain accounts as highest revenue/order drivers.

Order cancellations causes financial burden on the company.

Vendor Offlining is hurting overall Business

Higher commissions causes vendors with small cushions and hurts overall active inventory

Price discrepancies hinders companies' image and customer experience

Because of COD orders, there is wastage of money collected

 PROBLEM
A. • KFC and Mcdonalds drive 16% of the total • Our per order cost is roughly Rs 219
orders and 18% of the total revenue of
Dependence the business.
upon certain
accounts as
highest
revenue/order
• Along with this, a royalty of 25Million per
anum is paid to both the brands to stay in
drivers.
business with Foodpanda only.
• Both are the most important strategic
accounts for the company with highest
business contribution but due to their
business contribution, a commission of
just 15% is charged from both the
accounts which is the lowest company
charge to any account.
SOLUTION
and because of lower commission
charged to these accounts, we are
having a per order loss by their
business contribution.
• Shift as many branches as we can to
vendor delivery from foodpanda
deliver.
• Also, company should focus more on
other account with same potential and
business model to get more orders out
of them. Company should use their
Global partner to bring upon brands
such as popeye or wendys in Pakistan
to create a competition with these
accounts. Company did take this
initiative by bringing upon Jackson
Fried Chicken from Singapore.
• Along with this, we must stop giving
royalty to these brands wince there is
no other potential competitor as of
now in the market.
 PROBLEM SOLUTION
• There are 3 ways an order is cancelled: • Vendor fail is when vendors cancels orders
because of unavailability of product and doesn’t
1. Vendor fail hide the item. We will make sure to penalize
vendors on such cancellations so that they are
2. logistics fail vigilant about closing the items which is not

B. Order 3. Customer fail available at that time, for better consumer

experience.
• logistics fail is when order is cancelled because

cancellations of no availability of rider in the zone in the

operational hours. The proposed solution is to
make sure riders accepts the order when it lands

causes
to his ID. A rider cannot transfer the order to
another rider more then 3 times per day or his
ID will be blocked for the day. This is under

financial
consideration by the company already.
• Customer fail is when order is cancelled by
customer on any reason. (Highest quantum of or

burden on the
• There was a total business loss of 2057
Million in year 2022 because of the
cancellation is due to bad quality). Need to
make sure a customer is providing a legitimate
proof of food quality before cancelling the order.
Our team lacks the proper system to see

company orders being cancelled. As a partner we

are ought to pay our customers, as well
as our vendors for these cancelled orders
• This cause financial distress on our P&L
which is referred as CASH LOSS by the
company.
customer legitimacy in this regard. I have
proposed the solution to see customer order
history as well as their previous complaints and
make sure to block the customer if his
complaints are higher then a certain threshold.
• All these solutions will help company shrink the
overall wastage of orders and will gain more
revenue.
C. Vendor PROBLEM SOLUTION

Offlining is • Offlining is the difference

between operational hours set
Me along with my fellow colleagues
have proposed the solution in a

hurting
by vendor and actual working
hours. This results in order loss
and eventually hurts the
recent event to penalize vendor
with the aging of more than 60 days
with the 20% amount of business
loss they cause because of not

overall
business profitability
operating the committed hours. By
July 2023, there will be a pilot on
213 vendors and their contracts will

Business be revised adding this clause in their

contracts. This will eventually
increase number of orders, and will
result in healthy GMV numbers
 PROBLEM
• Average commission
percentage that we charge is
24.5%. This causes a lot of SME
to not be operational active for
a longer period causes overall
drop in orders.
SOLUTION D. Higher
commissions
We as a company realize that if
either party is not having a gain,
they might end the business terms.
We have decided that if we have as
many vendor’s working with us, this
will increase overall order count and
causes vendors
will reduce dependency on certain
vendors. We are offering lower % with small
cushions and
onboarding aswell. Though we will
be charging as low as 15%, I will
propose that these vendors will be
given a smaller zone to operate in
and there won't be any support in
terms of subsidy by the company to
hurts overall
them. These vendors will be
onboarded on clause that they will
active
be delivering food by their own
riders not using our rider service.
This will keep these accounts
inventory
motivated to work with us for longer
tenures.
E. Price discrepancies hinders companies' image and customer experience
PROBLEM
• Due to recent study in December 2022, it was found
out that roughly 26% restaurants are having higher
prices on foodpanda as compared to their own
restaurant. This is because they absorb the
commission in the prices and vice versa. Company
also took an initiative and reached out to those
customers who used to do >5 orders per month from
the app and doesn’t order now, they highlighted this
reason as one of the main demotivating factor for
them to use foodpanda; price discrepancies.
• Along with this, certain restaurants which are tax
registered, we charge additional VAT on checkout
from these restaurants which means any item which
in menu was of 1000, at checkout it is increased to
1130. This causes customers to not order from that
restaurant which was measured by one of our KPI:
CR4
Solution
• Best way to encounter such issues is that there
is minimal price discrepancy. We will align
formal meetings with vendors to mitigate such
actions or if they are not willing to do so we
will try to lower their commission percentages
or apply discounts in a way that prices are then
set to the prices in vendors menu
• For tax issues, we are trying to mitigate this
and trying to add tax amount in original
product amount. There is a provision in SAP
where we will be doing this shortly so that our
CR4 can have better numbers and customers
order the food with same amount that was
shown previously to them.

PROBLEM
F. Because of
• Out of every 100 orders, 87
COD orders, orders are on COD. The
amount collected by these
there is wastage orders reconciles 96.3% of
of money the total GMV value against
them.
collected
• This is faced mainly because
of riders hijacking the
amounts and closing their
IDs. Other reasons are
systematic risk involved in
the system
SOLUTIONS
• Since 2022, we have aligned with different
banks like HBL, BAHL, Soneri bank ETC and
have signed contracts of discount vouchers
where company bare 50% discount amount
and vice versa. This motivates consumers
to used card as a mode of payment which
have a much better accuracy and less
wastage.
• This can also be resolved with much better
accuracy if we align payment method with
companys such as jazz cash and easy
paisa/sada pay. There is a high population
which uses these services. This will help us
in other way aswell since our rider uses
easy paisa to deposit money in company
account so it can be streamlined with more
accuracy and cash wastage can be
controlled by some mean.
• Another proposed solution is that as
discussed earlier, customer fail causes
cashloss aswell where customers are
unable to pay for the order. We must make
a matrix where we can assess customers
previous data and make sure that if they
are clean, only then allow them CoD
orders, otherwise close their CoD delivery
option. This can help us control GMV loss
THANK YOU