India’s ride-hailing giant Ola hits the brakes on food delivery business Foodpanda

India’s ride-hailing giant Ola, which has expanded to select international markets and set ambitious goals for its electric vehicles business, is struggling with selling food.

Ola has suspended local operations of Foodpanda, the Indian business of the food delivery startup it acquired in late 2017, according to local newspaper Mint. The move comes as the mobility firm finds competition from unicorns Zomato and Naspers-backed Swiggy unsustainable, a source familiar with the matter told TechCrunch. The company will continue its business in some smaller capacity, but no longer attempt to fight back the two giants, the source said.

(Foodpanda, which operates in more than 10 other markets under a different owner — DeliveryHero — remains fully operational outside of India.)

After acquiring the India business of Foodpanda, the company’s second foray into food business, Ola aggressively tried to win customers by offering heavy discounts in early 2018. But months later, the discounts began to run thin as Ola revised its strategy for the food business, the source added.

The move comes as Zomato and Swiggy remain locked in a fierce battle in India, leaving little room for anyone without deep pockets and strong commitment. Uber has attempted to sell off its UberEats business in India to either of the two giants, but failed to get a deal, people familiar with the matter said. The San Francisco-headquartered firm, which went public earlier this month, has since cut its spendings budget for UberEats in India, a source familiar with the matter said.

Ola, which leads the ride-hailing market in India, has struggled with food business in the past, too. In 2015, it launched OlaCafe, a food delivery service that did not take off and was shut down a year later. An Ola spokesperson did not immediately have a comment to offer.

As of September last year, Foodpanda was processing about 3 million orders a month, compared to Swiggy and Zomato, both of which claim to handle over 30 million orders in the same period.

According to Mint, Ola has terminated contracts of most of its 1,500 food delivery partners, and laid off about 40 people. As of Wednesday morning (local time), the vast majority of restaurants listed on Foodpanda and Ola apps were not servicing in major cities.

India has emerged as one of the largest food-technology markets globally in recent years. It could be worth up to $2.5 billion by 2021, according to consulting firm RedSeer.

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