AirAsia Announces Planned Presence of Food Delivery Service in Indonesia

Airasia Group's food delivery business, airasia food, coming soon to Indonesia early next year. Currently the company has started to open registration for 1.000 culinary partners throughout Indonesia. This expansion first started in Malaysia, AirAsia's head office in May 2020. A year later, it entered Singapore.

Airasia food is part of AirAsia Group's efforts to explore the digital business, after airasia ride (ride hailing), airasia grocer (b2b e-grocery), airasia farm (b2c e-grocery), airasia beauty (E-commerce), airasia health (healthtech), airasia xpress (e-logistics) incorporated in the portfolio in AirAsiaDigital, venture arm belongs to a group formerly called RedBeat Ventures.

In an official statement, AirAsia Group CEO Tony Fernandes said his company is known for always providing added value and low costs for its customers. This was brought back to airasia food in Indonesia. “We will offer food delivery services at the lowest price with the best value, and ensure partners merchant we can make a profit from our services, instead of making a loss," he explained, Thursday (23/12).

Fernandes continued, “All this time AirAsia has always strived to create a fairer ecosystem for all and offer what the market wants. That's what we've done in the aviation industry. Therefore, look forward to the new ideas that we will offer through our new adventure in the culinary world.”

Airasia Super App Indonesia Head of E-Commerce Arbi Wienandar added, in the early stages of Airasia Food's presence in Indonesia, his party wanted to invite all culinary business actors to join as merchants and enjoy sales commission offers with attractive values ​​for the first three months to maximize profits.

"Apart from that, business actors who have joined this period will also get the opportunity to be exposed earlier to millions of airasia Super App users in Indonesia during the launch of airasia food later, which we will do gradually in various cities and we will announce it soon," said Arbi.

He further said, culinary business actors who wish to join can apply for a partnership by filling out the partner application form merchant which is available. Then, for business actors who have several culinary brands, branches, franchise, or operating in multiple locations, may apply for a partnership based on the owning entity in each location.

airasia food will select partners merchant based on location and type of culinary and will contact further for the signing of the cooperation, training, and .

The food delivery industry in Indonesia

Various studies have revealed that the potential for a food delivery business in Southeast Asia is very tempting. One of them stated by Snapcart States that GrabFood leads this market in the first market (Jabodetabek), and the second market (in Bandung, Surabaya, Medan, Lampung, Purwokerto, Banjarmasin, Samarinda and Makassar). This survey was conducted in October 2021, involving 500 culinary business owners and 570 consumers using food delivery applications.

GrabFood is said to be the application most used by merchants with the highest average daily revenue. The research shows that 82% of restaurants and food and beverage shops use it GrabFood, followed by GoFood (71%), and ShopeeFood (28%).

Then, the merchant's average daily sales from usage GrabFood for Rp. 750 thousand, 13% higher than using GoFood for Rp. 670 thousand. Research also found that the average consumer uses GrabFood six times a month, while GoFood five times a month. Average volume of orders through GrabFood is also 11% higher than GoFood.

Although tempting, the path to profitability is somewhat difficult and takes a long time. From airasia food's initial performance in Singapore, in the four months since its official launch, it has only handled 100 orders every day.

According to Fernandes, this is natural because the company wants to build its platform on a defensive basis, and has not even carried out an optimal marketing strategy. "Grab and foodpanda doesn't magically get all those orders right away, it takes time. So for sure, but slowly, we will get there." he said.

Grab also still trying to improve its financial performance. Based on financial reports Grab as of the third quarter of 2021, revenue depreciated 9% to $157 million from the July-September 2020 realization of $172 million. The loss before interest, tax, depreciation and amortization (EBITDA) fell further by 66% on an annual basis to $ 212 million.

The poor EBITDA was due to the negative impact of reduced mobility, as well as an increase in regional company costs due to Grab investing heavily in product development and future technology investments. However, GMV Grab grew 32% year-on-year to $4,04 billion. GMV of the shipping business grew 63% to $2,3 billion, offsetting the 30% decline in GMV in ride hailing to $529 million.

However, income Grab projected to improve in late 2023 with revenue to $2,5 billion, but still lost $648 million. According to S&P, EBITDA Grab will remain materially negative through 2022. However, net revenue has the potential to increase by 18% compounded annually until 2023. This is due to the increasing number of active users, regional economic normalization from Covid-19, and brand awareness to brands Grab.