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Food & Beverage

GrabFood to step up recruitment and R&D in Indonesia

Food delivery service also plans Jakarta headquarters

According to a CSIS study of all Grab business units, GrabFood made the biggest contribution to the Indonesian economy last year. (Photo by Kentaro Iwamoto)

JAKARTA -- GrabFood, the food delivery arm of Singapore-headquartered ride-hailing giant Grab, is betting big on Southeast Asia's largest market, Indonesia.

It is looking to ramp up recruitment and strengthen its R&D facility to expand its operations in the country and make Jakarta the hub of its food business.

"Indonesia has always been a strategic market for Grab... with GrabFood signaling to grow our operation in this country. Aside from that, we want to double down on the talent team and strengthen our R&D to support the operation," Demi Yu, head of GrabFood Indonesia, told DealStreetAsia.

Grab recently made headlines when it said it is setting aside $2 billion to roll out new services in health care, e-scooters and food delivery in Indonesia over the next five years. The announcement was made by Grab's CEO Anthony Tan in July when its investor SoftBank Group's chief executive Masayoshi Son met President Joko (Jokowi) Widodo in Central Jakarta.

To date, SoftBank has invested about $3 billion in Grab, with about $1.46 million of its ongoing Series H round coming from the SoftBank Vision Fund.

In July, Grab had also indicated that it would make Jakarta its second headquarters. In fact, within two weeks of the announcement, Grab Indonesia President Ridzki Kramadibrata had sent out an official statement stating Jakarta is slated to become the main operating base for GrabFood in Southeast Asia.

However, the blueprints are still being worked upon.

Yu, who took over at the helm of GrabFood Indonesia a year ago, said Grab is still carving out its plan and did not disclose the target investment that the ride-hailing major will set aside to set up GrabFood headquarters in Jakarta.

There is a reason why Grab wants to make Jakarta as its HQ for GrabFood.

In the first half of this year, the company's gross market value has grown three times for Indonesia, Yu said.

Meanwhile, according to a study conducted by the Center for Strategic and International Studies (CSIS), of all Grab's business units, GrabFood made the most significant contribution to the Indonesian economy last year, with 20.8 trillion rupiah ($1.46 billion), followed by Grabbike ($1.1 billion), Grabcar ($682 million) and Kudo ($190 million).

With the company's growing business in Indonesia and its rapid growth in the number of merchants, the company has set out an ambitious plan to become the largest food delivery player in Indonesia by the third quarter of this year.

"We have seen strong growth in Jakarta and saw nearly four times growth in other key cities such as Medan (North Sumatra), Bandung (West Java), and Surabaya (East Java)," she said.

To achieve that target, GrabFood is adopting a bouquet of strategies to acquire merchants and consumers, thereby looking to tailor food selections to suit the local palette. It is also leveraging its artificial intelligence to gauge users' recommendations and customize plans accordingly and ensure delivery within 29 minutes.

However, its journey is not devoid of competition as Indonesian behemoth Go-Jek, which pioneered the use of motorcycle taxis in the country and later added cars and taxis, claims to be the market leader in Indonesia with gross transactions values (GTV) for GoFood touching $2 billion last year. Grab, for its part, did not disclose its GTV for last year.

"The benefit of having competition only makes us stronger as a team," she said without mentioning other rivals.

"What makes us different is we give the opportunity to merchants in the second-tier cities to be able to serve their signature food in the capital city through our GrabKitchen," Yu added.

According to GrabFood's internal data, consumers in certain areas often faced difficulty with purchasing their favorite food due to lack of presence and long distances.

Keeping this in mind, Grab teamed up with food court operators, thus inviting GrabFood merchants -- both inside Jakarta and outside Jakarta -- to join GrabKitchen to bring food closer to consumers.

The company launched GrabKitchen in September last year.

"It is a low-risk business operation for our majority strategy partners [merchants], especially those who are located outside Jakarta. We are not only giving them the opportunity but also more exposure to consumers," Yu said.

Grab now has eight kitchens, with the majority located in the capital city, and one in Bandung.

"We are the first player to launch GrabKitchen. In the next couple of months, we will launch more outlets to grow this unit," she added.

She also sees that GrabKitchen business has begun to have "strong traction and growth" with its proprietary mobile platform and aggressive expansion plan.

"For the second HQ in Indonesia, we have high hopes ... we expect to become a leader in the country very soon," she added.

DealStreetAsia is a financial news site based in Singapore that focuses on corporate investment activity in Southeast Asia and India. Nikkei recently announced the acquisition of a majority stake in the company.

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