Despite trading losses increasing by $83mn to $100mn in the half-year period, driven by investment in grocery deliveries, Prosus said iFood’s core business was close to break-even.
Created in 2011, the popular app is a subsidiary of Movile, a Brazilian tech mini-conglomerate with roots in an IT enterprise co-founded by Bloisi in the late 1990s. In turn majority-owned by Prosus, Movile’s portfolio includes ventures in ticketing, games, logistics and financial technology.
Since its founding, iFood has raised about $700mm in funding and made nine acquisitions. It began deliveries in 2018; before then restaurants were responsible.
Today it has unrivalled reach across the continent-sized nation with presence in 1,500 towns or cities and an army of 200,000 couriers dispatching from 300,000 restaurants.
Uber Eats bet big on grocery deliveries by buying CornerShop, a Chilean start-up, for $1.4bn in 2021 © Alejandro Cegarra/Bloomberg
The company said its innovations have improved efficiency and brought down costs, with artificial intelligence helping to reduce delivery times, map out optimum routes and foresee orders based on customer data patterns.
However Fernando Lunardini, managing director at Boston Consulting Group, said with the pandemic waning he believed the Brazilian meal order market might be reaching a “plateau”.
“It’s very expensive for the restaurant,” he added. “Margins get tight, you have to increase prices, orders decrease. The balance is not favourable.” He warned that iFood might have to cut what it charges restaurants.
This perhaps helps explain the push into other areas, such as grocery delivery. iFood is building so-called “dark stores” to supply goods directly to customers in this nascent market.
However, sector specialists caution of tougher conditions in this segment, given the stronger bargaining power of supermarket chains and an array of competing apps.
Despite giving up on meals in Brazil, Uber Eats is betting big on this market in the country through CornerShop, a Chilean start-up in which it bought out the remaining stake it did not already own last year.
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“It’s a business with potentially better economics because of higher tickets and more regular purchases,” said Cristina Alvarenga, head of the operation there.
Ahead of presidential elections in the South American nation this year, the favourite to win, former leftwing president Luiz Inácio Lula da Silva, has pledged to boost rights for digital gig economy workers.
iFood insisted it was ahead of the curve. It already offers insurance to deliverers, created a 28-day sickness and quarantine benefit during the pandemic and has a minimum route value for drivers.
Bloisi called for new legislation that is “flexible and ready for the future” to enshrine such protections. After receiving regulatory approval to begin drone dispatches, he said investment in AI was another priority.
“This is our big dream — to be able to predict what the customer wants before they do, faster, cheaper and with better quality.”
Additional reporting by Carolina Ingizza