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CFO Deep Dive Series – Challenges & Opportunities Faced By The Food Delivery Industry

5 mins read

17 April 2023

Jamie O’Mahony, Chief Financial Officer, foodpanda

The food delivery industry has undergone significant changes in the last few years due to technological advancements, shifts in consumer behavior, and increased competition. One of the key reasons for this is that mobile apps have become an integral part of people’s lives. So much so that healthcare and food are accessible right at their fingertips.

With the widespread use of mobile phones, customers can now place food orders from anywhere, at any time, without having to visit a restaurant or wait in line. This has made food delivery much more convenient for customers, especially those with busy lifestyles and fortunately, this became more than just about convenience during the pandemic when lockdowns were in place. 

To find out more about the challenges faced by the food delivery industry during the pandemic as well as the post-pandemic landscape, DigitalCFO Asia spoke with Jamie O’Mahony, CFO, foodpanda

The Challenges That Food Delivery Companies Are Facing In The Post-Pandemic Landscape

The biggest challenge is adapting to shifts in consumer behaviour. Prior to the pandemic, it was easier to anticipate where the orders were concentrated, and the times at which orders would peak.

Let’s take Singapore as an example. For instance, pre-COVID, orders would usually peak around lunchtime, and they were largely concentrated in office-dense areas such as the Central Business District (CBD). Now, as people enjoy more flexibility in where they work from, orders are coming in from various locations around the island at differing times. The challenge therefore lies in the company’s ability to anticipate this demand as accurately as they can, so as to ensure that they have enough delivery partners to deliver the customers’ orders in a timely manner. 

“With restrictions removed, we see opportunities to provide even more value to our consumers,” says Jamie. 

At the height of the pandemic, people had little choice but to rely heavily on delivery platforms – either to get food, or groceries. Now that movements are no longer restricted, foodpanda is excited to enhance their services such that customers will still see value in using the foodpanda app as they go about their day-to-day.

Opportunities That The Post-Pandemic World Has Brought To The Industry

The pandemic brought about a huge transformation for the delivery industry. Many customers, restaurants, and merchant partners came onboard foodpanda for the first time, and the company is glad to see that many of them have stayed on the platform till today. This shows that they see value in being part of foodpanda’s ecosystem, and now post-pandemic, the company sees plenty of opportunities to continue enhancing their app offerings to serve new retail habits. 

One way that foodpanda is doing this is by launching dine-in. Now that more people are dining out, they saw an opportunity to continue providing value to customers who want to eat out – by enabling them to enjoy extra cost-savings when they become a pandapro subscriber. pandapro, which is their monthly subscription programme, allows subscribers to enjoy a pandapro-only feature called dine-in, which shaves off up to 20% off the entire bill when customers eat at selected restaurants. On top of that, pandapro subscribers also enjoy exclusive added perks, including unlimited free delivery when ordering from thousands of restaurants, online grocery store, pandamart, and retail marketplace foodpanda shops. 

“The post-pandemic era has also created a number of opportunities for us to be more efficient in our operations,” says Jamie. 

With more businesses participating in quick-commerce, foodpanda launched pandago – a Logistics-as-a-Service offering that utilizes their current fleet of delivery partners to send parcels on-demand. pandago  is also available to customers, who have found this service useful to retrieve urgent items, such as forgotten keys, or medicine. Without huge investments, foodpanda were able to provide customers with an additional service that meets their needs in the post-pandemic world, while at the same time providing delivery partners with increased income through more orders. 

The Rising Trends In The Industry

“I believe that personalisation of services will be a huge must-have moving forward,” says Jamie.

With millions of customers placing orders on their platform everyday, foodpanda has a wealth of data on customers’ preferences and purchasing habits. There is more that the company can do to leverage this and continue elevating the experience they offer their customers. 

“When faced with too many options, consumers will find it hard to choose. I am sure we’ve all faced the same situation when choosing a show to watch on streaming platforms – eventually, we end up watching re-runs of  shows we’ve previously watched,” says Jamie. 

The same concept applies when choosing what to eat or items to buy. By curating the list of options based on the customer’s past preferences and purchasing habits, foodpanda wants to narrow the options to those that the customer is likely to choose – therefore simplifying the ordering process. 

Outside of the food delivery industry, Spotify does a really good job of using data to personalize the experience of each user. Jamie believes there’s an opportunity for foodpanda to do the same on its platform – by providing spot-on recommendations for each consumer based on their preferences and purchasing behaviors. 

Recap On How The Food Delivery Industry Was Impacted By The Pandemic & The Changes Made In The Last Two Years

During the pandemic, all delivery platforms saw a boost in demand for delivery, driven out of necessity given restrictions. Customers had to rely on delivery platforms for their meals, and even groceries, as they preferred to stay home to keep safe. Restaurants that were not previously offering delivery had to quickly pivot as they were unable to serve dine-in patrons. With travel and hospitality industries impacted, individuals who were out of jobs turned to platform work to tide them through. 

“Our efforts were focused on ensuring that we were able to support the increased reliance on foodpanda, without compromising on the quality experience that we want all our stakeholders to have,” says Jamie. 

This meant mobilizing their teams to accelerate the onboarding process for restaurant and delivery partners who were keen to come onboard. Having more restaurants means more options for customers, and having more delivery partners meant that the company was able to fulfill their promise of delivering customers’ orders in a timely manner. 

There was also agility required to ensure that foodpanda’s operations take into account the safety and health of their delivery partners and customers. Which is why, they very quickly introduced contactless delivery, and provided delivery partners with sanitisers and reminders on how to keep themselves safe while they conduct deliveries. Now, contactless deliveries are still an option for customers who prefer minimal contact. 

On top of that, foodpanda was also operating in a low interest rate environment, which enabled the industry as a whole to grow at an unprecedented rate. Now, the company is facing a much more challenging business environment, contributed by inflationary pressures and rising cost of capital. It’s likely that such macroeconomic factors will persist for the foreseeable future, and foodpanda will need to continue to display the same characteristics of agility and flexibility that they did during the pandemic to grow the business. 

“I believe we have reacted swiftly to cater to customers of the now with the launch of new services, and are well-placed to meet the needs of customers of tomorrow with upcoming partnerships and enhanced offerings,” says Jamie. 

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