In December of last year, Abdul Samad, 34, a Foodpanda rider in Karachi, Pakistan, was hit by a car while making a delivery, and ended up at the hospital with a fractured leg. But the insurance offered to him by Foodpanda could barely cover his medical expenses and he said the company refused to pay the three-week compensation it promises to riders in case of accidents. Samad has had no source of income for the last four months, and he is unable to work due to his injury.
On March 11, he joined thousands of other disgruntled Foodpanda delivery workers in Karachi who went on strike demanding fair wages and better working conditions, bringing the app’s operations in the middle of a weekend rush to a halt. The workers’ grievances were numerous: the company recently cut some delivery rates, Samad, who is also a member of Karachi’s Foodpanda Riders’ Union, told Rest of World.
“Almost every quarter, the company reduces its rate per delivery,” an entrepreneur associated with Pakistan’s foodtech industry told Rest of World. They requested anonymity for this article out of fear of reprisal from Foodpanda. “What this means is that riders continue to earn the same amount of money per hour, but have to put in more work.”
The strike was the latest in a line of troubles for Foodpanda in Pakistan, a country it counts among its “high-growth markets.” The company is also dealing with a management reshuffle and a probe by Pakistan’s competition watchdog.
These problems could be particularly worrisome for Foodpanda, which claims to be Asia’s largest food delivery firm, as it is having a tough time in several other Asian countries, including Myanmar, Thailand, and Hong Kong. After being acquired by Ola, the company exited India, and its parent, German multinational food-delivery giant, Delivery Hero, pulled out of Japan last December.
Foodpanda did not respond to Rest of World’s request for comment about its troubles in Pakistan.
Foodpanda has dominated Pakistan’s delivery space for nearly a decade, acquiring its main local rival, EatOye, in 2015. According to the entrepreneur quoted above, Foodpanda currently holds a 99% share of Pakistan’s food delivery market.
But in February, Foodpanda Pakistan’s long-time CEO Nauman Sikandar Mirza stepped down to “pursue other passions.” Mirza, who served as CEO for nearly seven years, is widely considered to be the mastermind behind the company’s success so far. Foodpanda has currently appointed a temporary managing director for Pakistan, as it scouts for Mirza’s replacement.
According to food and lifestyle blogger Zain Awan, who operates a Foodpanda “home kitchen,” which allows home chefs to sell their products on the app, the platform isn’t as lucrative as it once was. Foodpanda has decreased the delivery radius in Pakistan because it doesn’t have enough riders to meet the demand, Awan said. This means he is now unable to sell his food beyond a 1-kilometer distance, resulting in lower sales.
Also, even as the company has decreased riders’ commissions, Awan said, it continues to charge a 35% cut on his sales. “If Foodpanda has decreased the amount they pay their riders, why are they still taking hefty commissions from home chefs and restaurant owners?” he asked.
Foodpanda has stumbled in neighboring India as well. In 2017, Foodpanda unceremoniously sold its India business to ride-hailing firm Ola, after struggling to compete against local rivals Zomato and Swiggy. Ola shut the business — which was reportedly riddled with issues like fake restaurant listings and technical glitches — around 18 months after the acquisition.
In Myanmar, its riders were on strike for nearly a week in March this year, after the company started cutting their fees without prior notice. In Thailand, Foodpanda faced a consumer boycott in the summer of 2021, after it said it would fire a rider who had participated in the pro-democracy movement. And in November 2021, hundreds of riders in Hong Kong went on a two-day strike after the company reduced their commissions. Meanwhile, in December, just over a year after entering Japan, Delivery Hero decided to pull out, citing increased competition and a shortage of drivers.
At least in the short-term, labor struggles will not significantly affect either Foodpanda’s growth in Asia or Delivery Hero’s status and market capitalization, according to Niels van Doorn, principal investigator of the Platform Labor research project. “This is because the company can afford to cut prices and largely ignore the ensuing strikes/protests, as it knows there are plenty of workers who will still accept and complete deliveries. As long as these protests do not scale, they have nothing to worry about in terms of daily operations,” he told Rest of World.
Nonetheless, worker unrest in multiple markets is a clear signal that all is not well with the gig economy, said Mark Graham, director at Fairwork, an Oxford Internet Institute research initiative. “The widespread reporting of low pay, dangerous [working] conditions, and unfair management practices shows that the sector, left to itself, is rarely going to ensure [that] even basic standards of fair work are met,” he told Rest of World. “Because companies are rarely stepping up, we need regulators to.”
According to industry experts, Foodpanda will likely remain the dominant food delivery platform in Pakistan, mainly because there are no other options in the market. “A first-mover advantage and ability to kill competition has ensured its survival,” said economist Ammar Habib Khan. “Albeit at the cost of suppressed wages, and ever compressed timelines, which are difficult to humanely manage in a country where infrastructure is mediocre at best.”
But the company operates under the looming fear of regulatory challenges.
In July 2021, the Competition Commission of Pakistan initiated an inquiry against Foodpanda after receiving multiple complaints of antitrust abuse, exorbitant commissions, and discriminatory pricing. These practices, according to the complaints, were creating barriers for new companies hoping to enter the food delivery industry in Pakistan.
The strike in Karachi was called off within two days, but Foodpanda Riders’ Union gave the company a 14-day ultimatum to resolve their complaints. As of March 20, the Riders’ Union had not heard back from the company’s management, a representative of the group told Rest of World.