DealGuru spins off food delivery unit to form Food Runner, will expand across Southeast Asia

E-commerce operator DealGuru, the firm behind Southeast Asian buying site Deal.com.sg, has spun off its food delivery subsidiary to form ‘Food Runner’ as it seeks to expand further in the region with local partnerships.

The company’s latest move comes less than a year after it gobbled up rival Asia Room Service on undisclosed terms in October 2012. DealGuru’s food delivery unit, which operates with the Room Service Deliveries brand, has more than 50,000 registered users and delivers several million dollars’ worth of restaurant food annually.

“The business has been growing strongly. We felt it had reached a point where it made sense to operate with the greater flexibility and focus that a separate business provides,” says Lance Frey, the new CEO of Food Runner and previously DealGuru’s CFO.

Focusing only on Southeast Asia

Michael Brehm, the CEO of Rebate Networks – the German investment company behind DealGuru – says the company estimates that the food delivery market in Southeast Asia will be worth $390 million by 2015, “driven by consumer demand, rising incomes and continued urbanization”.

In an interview with TNW, Frey laid out plans for Food Runner’s expansion into Southeast Asia with “multimillion dollar acquisitions across the region”.

“We do think food is a very local thing. You really need to have a local company that knows what people like to eat, how they like to get them and how they like to get it to them,” he said, explaining the rationale behind Food Runner’s preference of acquiring companies, instead of building the food delivery business from scratch in each country.

Frey revealed that Food Runner is the closest to being launched in Vietnam next – “hopefully that should launch the next month or two” – followed by Philippines and Thailand.

Fending off competition

Frey also elaborates on the different approach that Food Runner is taking versus its competitor, Rocket Internet-backed Food Panda.

“We are partnering with local existing companies; they’re trying to build everything from scratch,” he says.

He adds that Food Panda is expanding rapidly to many countries, while Food Runner is only going to focus on Southeast Asia and on expanding existing operations as well as keeping them profitable.

According to Food Panda’s website, it currently operates in 27 countries – including several in Africa such as Nigeria, Kenya and Ghana.

As for Food Runner – “We’ll never expand, I think, outside of Southeast Asia. We want to be as local as possible. We think people like local food, and we want to be a local food alternative,” Frey says.

Image Credit: Luis Liwanag via AFP/Getty Images