The food delivery market in Dhaka has only grown hyper-competitive over the past two years. A year ago it was Pathao Food, the food delivery service wing of ride-hailing company Pathao, which was offering hefty discounts to the point of absurdity, and today it is Foodpanda. While Foodpanda, with its renewed focus in the region for growth, is leading the discount war, remaining of the players do maintain a steady push, albeit not at the extent of Foodpanda.
Shohoz Food, the food delivery offshoot of ride-hailing company Shohoz, remains a competitive player. The company continues to push its food business and claims to have excellent growth in the food delivery business. Pathao Food, however, has significantly curbed its hyper discounting approach. But it remains a competitive player and tries to cover up its discounting limitations with service and product level innovations such as loyalty points.
The new entrant Uber Eats is relentless. Officially launched in mid-2019 in Dhaka, the company is trying to make up for its late entry to the market with discounts and other promises.
Local and earliest player HungryNaki takes a different path, largely due to the reality that fundraising remains a challenging affair for local companies. The company has taken a slow and steady approach to growth. The company, it appears, will try to wait out the discounting fight if the current situation persists. The other prominent player Cookups is more strategically positioned due to its recent strategic partnership with Chaldal. With Chaldal’s backward market linkage to grocery supplies, Cookups has a better path to profitability in a market widely known for its loss-making nature. But nothing is sure in the world of online food delivery. The startup remains thrifty when it comes to discounting.
The limited access to capital makes it a tough play for local companies to compete with international players such as Uber Eats and Foodpanda (Foodpanda parent company Delivery Hero is a public company), both publicly traded companies with almost infinite access to capital to spend. One local founder complained that the “digital business policy environment in Bangladesh is not only disadvantageous to local entrepreneurs, it is outright hostile to local digital businesses. There is no level playing field in the market for local players.”
There are several common thesis in favor of the food delivery business in Bangladesh. One: a growing urban population with dual-income families scarce of time and in need of support for household chores. These people seek convenience. This is exactly what a food-tech company CEO told us a few years ago: “We are seeing a rapid change in family dynamics across the board. An increasing number of women are working today. The number of nuclear families is on the rise making it difficult for families where both husband and wife work full time to cook and manage food. All these changes are contributing to a growing demand for ready-made food and take-out culture.”
None of the thesis, however, stands to the reality in the market. Despite on and off discount spree from several players, the growth remains sluggish. According to several industry insiders, the total daily delivery was at 25,000 orders per day in 2019 on average. There are estimates that the overall current market size for food delivery is $10 million and it could grow to over $5 billion by 2025.