Online food delivery start-up HungryNaki has halved the number of its zones of operation in Bangladesh to 15, having suspended business in a number of cities.
A top official at the company said 13 of the areas where they have continued their operation are in Dhaka and two in Chattogram.
HungryNaki has suspended business in all other divisional cities and city corporations, including Gazipur and Narayanganj.
“We made the decision based on the business prospects of some areas. The zones with no profit have been closed. Our business will continue in the areas with a good customer base,” said the official, who requested anonymity.
Online food delivery business boomed in Bangladesh during the COVID-19 lockdowns in 2020.
Chinese e-commerce giant Alibaba acquired HungryNaki in 2021 from its local owners via Daraz Group, the Pakistan-based e-commerce platform it acquired in 2018.
Despite the boost in some city areas, the online food delivery business is yet to take off, depending on incentives.
Foodpanda, Pathao Food, Shohoz Food, Uber Eat and HungryNaki became popular among a section of customers in a short period of time, but eventually Uber Eat and Shohoz Food rolled back their business.
The HungryNaki officials said the expansion of their business still depends on discounts and cash-back offers. “The market is not sustainable yet. It’s still centred on Dhaka and Chattogram.”
He said a shortage of riders, or sometimes more riders than required, is a big challenge in the business. “It’s a dynamic business. It’s difficult to keep up with the demand.”
“But it doesn’t send a warning to the food delivery market,” he said, adding that competition made things more difficult for them.
Fahim Ahmed, managing director and CEO of Pathao, said: "Globally, the food delivery business has been evolving towards a more sustainable business model that provides value to the consumer, rather than just target top-line growth through aggressive subsidies and cash burn."
"In Bangladesh, Pathao Food has grown over 2x in the last year, while operating profitably and with a relentless focus on driving customer satisfaction," he said.
Sourav Dey, a spokesman for Foodpanda, said their business was closed for some days in the early days of the pandemic when restrictions were tough. Later, the government allowed the restaurants to reopen. “Now our business is at the stage of growth.”
“We're offering services, including grocery delivery, in all the district towns outside Dhaka.”