How does Foodpanda make money?

Foodpanda is an online grocery and food delivery service owned by the European multinational company Delivery Hero.

Foodpanda was started in 2012 by Benjamin Bauer, Christian Mischler, Felix Plog, Kiren Tanna, Ralf Wenzel, Rico Wyder, Rohit Chadda, and Simon Schmincke. Each of the founders was working for German incubator Rocket Internet at the time, which was known to take proven business ideas and introduce them into underserved regions.

One such region was Southeast Asia, where it soon became apparent that the food delivery and grocery market was ripe for exploitation. In April 2012, Foodpanda was launched in Malaysia, Singapore, Thailand, and India, among other countries. Within twelve months, the service had partnered with thousands of restaurants across 27 countries.

Around 2015, Foodpanda changed its restaurant aggregator business model in response to the emergence of smartphones in the Southeast Asian region. Similar platforms such as DoorDash were providing their own couriers, allowing many restaurants to offer takeaway but not be required to deliver the food themselves.

By the end of 2016, Rocket Internet sold Foodpanda to Delivery Hero. As a result of the acquisition, Delivery Hero hoped to process over 20 million orders per month in 47 countries. Further expansion saw the Foodpanda platform offered in Myanmar, Cambodia, Japan, and Laos in 2019 and 2020.

Today, Foodpanda partners with more than 115,000 restaurants around the world in over 400 cities.

Foodpanda revenue generation

Foodpanda has a typical revenue generation strategy for a food delivery business. The company utilizes the marketplace business model, matching riders and restaurants with customer demand.

A more detailed look at revenue generation is provided below.

Commissions

Foodpanda makes most of its money through restaurant commissions. 

When a consumer places a food order, the company charges anywhere from 25 to 30% of the total order amount to restaurants.

Delivery fees

Consumers ordering food also pay delivery fees, with the exact fee depending on the country-specific market. Fees are also contingent on how close the customer is to the restaurant, with larger distances commanding higher delivery fees. 

Foodpanda also charges delivery fees as part of its Pandago service, where other businesses can utilize its fleet of couriers to make same-day deliveries on food, groceries, documents, and other retail products. 

Given that Foodpanda cannot collect a restaurant commission from these orders, the delivery fee is likely to be much higher to compensate.

Subscriptions

Pandapro is the name given to a monthly subscription program for consumers, allowing them to receive exclusive deals and benefits. Such perks include free delivery and access to various discounts and vouchers.

The subscription fee charged depends on the consumer’s country of residence.

Grocery sales

Grocery sales are handled through a service called Pandamart, an on-demand platform selling over 3,500 daily essentials such as fresh produce, household items, beauty products, and medication.

Products are stored and distributed from Foodpanda-owned and operated warehouses. To make a profit, it can be assumed the company is marking up prices on certain items.

Key takeaways:

  • Foodpanda is an online grocery and food delivery service owned by the European multinational company Delivery Hero. The founders of the platform worked for Rocket Internet, a start-up incubator known for replicating successful business models in underserved markets.
  • Foodpanda adheres to a typical revenue generation strategy for a food delivery business. It charges restaurants a commission fee and consumers a delivery fee.
  • Foodpanda also offers a consumer subscription service, giving them access to various discounts and perks. The company also operates an on-demand grocery platform for household staples and other essential items.
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