Sep 16, 2015 11:31 AM
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In the last few months, online food ordering has taken the startup world by storm, even biggies like Zomato have joined the fray, but the first name that usually comes to my mind is Foodpanda. For millions of office goers like me, so much competition was a blessing, after all those attractive discounts and vouchers meant eating out was lighter on our pockets, sometimes a meal came at a shoestring budget.
There was always a feeling that something was amiss. How could these startups sustain with such a discounting model? burining VC money perhaps, but for how long?
What appeared in Mint today finally answered all my queries and could probably trigger a paradigm shift in the industry. One would expect small players to do what it takes to fight, but what came out of the closet were irregularities from the biggest player in the market, Foodpanda, no less than the scams that has affected India in the last few years.
Here is a gist of what happened
1. Non Existent Restaurants - A number of restaurants listed on the platform are either fake(existing only on paper) or has been closed down.These were kept on the platform just for consumer retention and bloating of figures for press releases
2. Unpaid dues to Restaurants- A number of restaurant chains were not paid allegedly because they couldn't find transactions in the system. Lack of a proper process of communication aggravated the situation, customers often landed at restaurants with orders that the owners had no clue of. At times cancellations were not communicated leading to losses.
3. Insider troubles and conflict of interests - Awarding contracts to favourites and sister companies of the directors had become a norm, contract values were fudged.
4. Employee Attrition - A number of directors have resigned due to lack of integrity and transparency in the working of the company. VC favourites elevated.
5. Ghost Restaurants by Directors - Some Directors set up more than 400 Restaurants and generated thousands of fake orders everyday, thus diverting a lot of cash to their pockets.
6. Contracts to Ghost companies - Jobs were outsourced to ghost companies and money was routed in the name of employee salaries
Screw Ethics, Screw Customers, Screw the Industry, All hail Foodpanda!
