Bloomberg Línea — After consolidating itself as the leader of Brazil’s restaurant delivery market, iFood has been investing to expand into other businesses such as supermarket deliveries, meal voucher services, and loans to restaurants and other partners, CEO Fabricio Bloisi told Bloomberg Línea in an interview.
This expansion aims to replicate iFood’s ventures into other verticals such as pharmacies. Despite not having received what the company deems “considerable investments,” this sector currently generates a monthly revenue of R$60 million (US$12 million) for iFood.
Expansion also aligns with iFood’s decision to prioritize the Brazilian market, rather than investing to build up its operations elsewhere in Latin America. Last year, the company chose to exit its operations in Colombia and now solely operates in Brazil.
“Our focus is solely on Brazil because we have one of the most beloved brands in the country, with 50 million customers. We believe we can expand into various adjacent markets,” stated iFood’s CEO during an interview at the G4 Valley event organized by G4 Educação on December 10 in São Paulo.
Bloisi mentioned that the plan is to leverage iFood’s brand and customer base to further expand into areas similar to those explored by fintech companies. According to the CEO, the startup has already lent R$500 million (around US$102 million) to restaurants.
The executive is one of the co-founders of Movile, the holding company that controls iFood, which in turn is part of the Dutch group Prosus. He took on the role of iFood’s CEO in April 2019.
Last year, Prosus acquired the remaining 33.3% stake in iFood from the Just Eat group for €1.5 billion (US$ 1.6 billion) in cash, along with a commitment to pay up to €300 million (US$329 million) at a later date. This transaction effectively valued iFood at US$5.4 billion, elevating it to one of the most valuable startups in Latin America.
With this operation, Bloisi stated that he now has more autonomy to make business decisions about the direction of the delivery app. “(This) means more control of iFood for me. Now, I can take more risks in areas I’ve always wanted to explore,” he said.
“I’m in a phase of investing more because I believe we’re just getting started. We can have a much greater impact not only in the food delivery market as it exists today but also in supermarkets and meal vouchers.”
The executive referred to the iFood Benefícios business, launched in 2020, to offer meal vouchers and benefits for companies through its platform in partnership with registered restaurants.
This business competes with traditional industry leaders like Sodexo, Alelo, and Ticket, as well as startups such as the French company Swile, which is well-capitalized and sees Brazil as its primary market, and Caju Benefícios, among others.
In Prosus’ latest report, the revenue from iFood’s adjacent businesses, which includes supermarket delivery and fintech services (providing financial services to restaurants and payment solutions), saw a 21% annual growth. This metric reached US$69 million (approximately R$345 million) in the six months ending on September 30, 2023.
Meanwhile, the operating losses in this area decreased from US$95 million to US$91 million compared to the same period last year.
During the same period, iFood’s total revenue reached US$679 million (approximately R$3.4 billion), with the operating profit increasing by 149% to $67 million (R$335 million).
iFood’s core restaurant delivery business also grew by 17% in local currency, excluding mergers and acquisitions. In total, revenue from the core business amounted to US$610 million.
The profit from the core delivery business grew by 106% in local currency, excluding mergers and acquisitions, reaching US$114 million. This growth was propelled by operational efficiencies, such as lower personnel costs and more targeted marketing, as reported by the company.
When asked about a potential IPO (Initial Public Offering) for iFood, CEO Fabrício Bloisi mentioned that going public is not currently on his roadmap, at least for the short term.
He stated that this decision allows the company to be more flexible in its investment decisions and to have more freedom. However, he did not rule out the possibility of going public in the future, subject to the decision of the board of directors.
This path has been taken by other companies operating in the delivery segment abroad.
In September, the American company Instacart, focusing on grocery deliveries, raised US$660 million through an IPO on the Nasdaq. Before that, companies such as DoorDash, also from the United States, and European rivals like Delivery Hero, Just Eat, and Deliveroo, have gone public.
In Europe, the stock performance has faced numerous challenges, particularly during a period impacted by high global interest rates, which affect rapidly growing companies.
The three companies (Delivery Hero, Just Eat, and Deliveroo) have lost over 75% of their market value since the peak in September 2021, as reported by Bloomberg News. Currently, they’re making efforts to enhance profitability, including reducing aggressive promotions.
Regarding competitiveness in the Brazilian market, Bloisi underscored the company’s strength in operating within the country. He attributed iFood’s positive and growing operational performance to a focus on quality, customer service, and innovation, highlighting that the team of over 5,000 people is concentrated in Brazil.
“We must take pride in a Brazilian company that operates one of the best in the world in our segment,” said Bloisi, emphasizing the significance of operating in different economic cycles.
“Technology isn’t immune to these changes in the economy. Technology companies need to understand that during contraction phases, it’s time to operate more efficiently,” stated the CEO.