Competition Goes a Notch up in Food Delivery Sector as Swiggy Acquires Scootsy

Competition Goes a Notch up in Food Delivery Sector as Swiggy Acquires Scootsy

Mumbai: Food delivery sector in India is on the verge of witnessing fierce competition as acquisitions are happening and further acquisitions are on the cards especially in the key markets like Mumbai. Recently, Swiggy – a food ordering and delivery company, acquired Mumbai based on demand delivery firm Scootsy.

The acquisition that took place on Thursday was valued under $8 million (at about Rs 50 crore) and has been under an all-cash deal. The brand name of Scootsy is being retained in Mumbai.

Apart from this, another acquisition is on cards as Ola-backed Foodopanda is also on the verge to acquire Mumbai-based cloud kitchen player Holachef. Notably, Holachef had shut down the operations around three months ago.

Notably, both the firms – Scootsy and Holachef – were struggling from quite a long time to raise capital whereas top two food ordering and delivery companies – Swiggy and Zomato – have raised large amounts of capital.

Swiggy to Reap Benefits out of Acquisition

This acquisition will bring a lot of benefits to Swiggy as the company plans to penetrate into the hyperlocal delivery market. The company would get the benefit of the premium customer base of Scootsy and will elevate the network of 40,000 restaurants of Swiggy.

Read More: Swiggy Plans to Raise $500 Million Funding

As of now, around 2,000 orders per day are delivered by Scootsy with the help of its 700 delivery agents across its food and non-food delivery operations in South Mumbai, Lower Parel and some parts of Bandra whereas around 500,000 orders are delivered by Swiggy across the country with the help of 55,000 fleets it has.

Apart from this, Swiggy will be able to get the benefit of the premium customers as the order value of Scootsy is Rs 750 which is far more than the order value of Swiggy which is Rs 350. This will also give Swiggy an upper edge over its rival Zomato.

In three years, Scootsy raised around Rs 25 crore from Agnus Capital and Khattar Holdings. Around 25 to 30 per cent of Scootsy business comes from non-food hyperlocal delivery operations like flowers, gifting etc. despite the company also catering to premium dining options for a niche, premium and high-ticket-size food delivery play in the city.

According to information available through a source aware of the discussion of acquisition, a major part of the deal will be used to clear the salary dues of over three months at Scootsy.

Foodpanda Acquiring Holachef

As far as acquisition of Holachef by Ola-backed Foodpanda is concerned, no amount has been finalized yet but as per the industry experts the latter will cover pending dues and absorb some of the staff of Holachef. It is also expected that the founding team of Holachef will join the management leadership of Foodpanda.

The major benefit for Foodpanda from the acquisition of Holachef will be that it will enter the cloud kitchen market where players like Zomato and Swiggy are already the frontrunners.