Digital Economy: Online Meal Delivery Firm Foodpanda Expands in Georgia

Digital Economy: Online Meal Delivery Firm Foodpanda Expands in Georgia

Digital Economy: Online Meal Delivery Firm Foodpanda Expands in Georgia

After five months of operations in Georgia, the online food-ordering portal ‘foodpanda’ is going to open up in Batumi and Kutaisi from September 2014. Currently foodpanda is represented in Tbilisi, Mtskheta and Rustavi. With a strong financial backing from its holding company Rocket Internet, one of the world’s largest internet incubators based out of Germany, foodpanda is going to strengthen its marketing campaign and become the number one food delivery company not only in Georgia, but worldwide. However, foodpanda welcomes new competitors on the market, which are expected to appear soon, according to Giga Kerkadze, the Director of foodpanda in Georgia.


Foodpanda has recently got financing of around USD 60 million from a group of investors, including various existing investors, Falcon Edge Capital and Rocket Internet AG. Since its launch in 2012, foodpanda has raised over USD 100 Million. Recently, the company acquired its competitor Delivery Club, making it the leading food delivery marketplace in Russia.


“From September 2014 foodpanda has great plans that it is going to implement, which include increased marketing campaigns and opening up in new cities. So far, the company has only been involved in online marketing as the online sphere is foodpanda’s operational platform. But as we intend to cover more territory in Georgia we need to have higher awareness of our brand name. Before opening up in certain places the only challenge for foodpanda is a lack of good restaurants. As soon as we see that the number of good restaurants increases and there is demand for our service from more people, then foodpanda will naturally respond to that demand,” Kerkadze said.


“There are 45 countries where foodpanda operates and the recently attracted USD 60 million will be distributed among them, including Georgia of course. The money will be spent on making foodpanda the most powerful online tool for food delivery in the universe and on strengthening its leading positions everywhere. Foodpanda was created to be the leader. For example, in Russia there was Delivery Club, which was a very big competitor of foodpanda’s. However, as it was difficult for foodpanda to share the leading position with the other company, it purchased Delivery Club and is now the top food delivery company in Russia,” he added.


“We are not afraid about increased competition. We already know that some companies are going to start operations in the same field, but we welcome the development. Nowadays, what we are doing is that we are introducing the culture of food delivery to Georgians. If other companies will join us and help us in raising awareness of food delivery in general, that will help foodpanda too,” Kerkadze said.


Foodpanda was launched first in Singapore and had expanded into 16 countries by the end of 2012. This was followed by an expansion into seven more countries, to make a total of 23, by February 2013. The company stated that it aimed to move into 40 nations in Asia, Europe, Latin America, the Middle East and Africa by the end of Q1 2014 and it did achieve this. Nowadays, foodpanda operates in 45 countries, including Georgia, which it entered in December 2014.


The mobile application is recording more than 10,000 visitors, according to Kerkadze who declined to disclose their monthly revenue and the number of orders received in a day. He however did say that their mobile app is doing very well as 40 percent of orders are received via it.


Foodpanda employs 10 people in Georgia so far. Foodpanda has online menus from a staggering selection of delivery restaurants. By visiting foodpanda’s website or its mobile application, customers can search for food by cuisine type, restaurant or even price range. The restaurant index also includes address and delivery hours.


“Foodpanda always puts a focus on new markets, especially if it is an emerging market. Georgia was attractive for the company as well as it very usefully cooperating with foodpanda. As a result of the harmony of interests we started joint cooperation in this country. Foodpanda is a growing company in every market and we all knew that, but in Georgia it has achieved remarkable success. Georgia was the 41st country out of 45 countries where foodpanda operates and during a period of just five months it has already outranked 25 countries,” Kerkadze said.


“Foodpanda operates successfully in every country and this encouraged us to believe that it would be successful in Georgia as well. At the same time, we thought that Georgia was ready to create a preferable platform for internet business for its successful operation. We observed that the level of internet usage was high in Georgia and that more people were using mobile internet at the same time. And finally, we all know how Georgians appreciate good food and eating. Our business is exactly dependent on the following things - internet usage and demand for food - this is the mix which drives the foodpanda model. In addition, what’s very important is to have big cities and many restaurants. Nowadays, foodpanda is represented in Tbilisi, Mtskheta and Rustavi. These might not be big cities compared to other cities in the 44 countries where foodpanda operates, but the three of them operate quite well as they do not lack for good restaurants. At present, foodpanda has 50-60 partner restaurants in Georgia,” he added.


Fast food is the most popular type of food among foodpanda’s customers followed by pizza, sushi and Georgian food. Out of the fast food menu, Pita is the most popular. The average cost of an order is GEL 30. The average cost of an order in Georgia is higher than in Bulgaria or Romania. In general, food which is cheaper is more in demand. On the other hand, sushi, which is an expensive type of food, is also very popular. So far, foodpanda has already had several thousand orders.


Foodpanda does not regulate the food delivery price. Every food establishment has their own prices. Also, the food delivery price varies depending on the place from where the customer orders the food. On average though, the food delivery price is GEL 7.


“We thought that lunchtime would be the busiest time in terms of number of orders. But we have found that suppertime is actually the busiest. This is due to people who do not know how to cook, are lazy about cooking, or are simply too tired after a hard day’s work and do not have the strength to cook. Therefore as a result of such reasons more people tend to order food via foodpanda for supper,” Kerkadze said.


Based on the “market place” model foodpanda creates preferable conditions for customers, restaurants and for itself.


“First of all let’s start with consumers. Foodpanda created a very convenient platform for them, where they can view a variety of different restaurants and foods and can select their preferred one. Also, they have information on not just the menu, but the prices as well. This means that they do not have to spend extra time searching for different restaurants on the internet, calling them, finding out about their menus and prices, etc. Now they can just visit foodpanda’s website and get all the information they need at one glance. Thus they can save time. If the customers do not like the service, they can complain about it and if the restaurant does not improve the quality of the service, foodpanda stops cooperation with them. At the beginning of its operations in the country, foodpanda had more partner restaurants in Georgia than it does now, but as the quality of some of the restaurants did not match up to foodpanda’s standards, the cooperation failed,” Kerkadze said.


“Our benefit is that we cooperate with the restaurants and share their profits. We work with them on attractive commission slabs. For restaurants this cooperation is profitable as they get new clients and increase their numbers. We give them such a technological platform which would be very expensive for them to create on their own. I refer to the online platform - web and mobile application, which are designed in our head office and are created in accordance with internationally high standards. The restaurants get more loyal customers as a result, because people have everyday contact with their food via foodpanda’s application. Accordingly, the number of the restaurants’ orders increases,” Kerkadze said.


The mobile application which is designed for foodpanda is the most-used one in Georgia, Kerkadze says. Even the banks could not reach the same level of usage, which means encouraging customers to use their app every day. The mobile app has had more than 500 thousand downloads globally so far.