Cheetay put its own riders on the payroll, raised more than $11 million, and ran out of room

In 2019 Cheetay told investors that its edge over Foodpanda, Bykea and Eat Mubarak was that its riders worked for it, on salary, instead of delivering as freelancers. Five years later it was reported to be preparing to close. In between, the Lahore company raised more than $11 million and made one decision that shaped everything else: it kept its delivery fleet on its own payroll.

A food app with its own riders

Cheetay began operating in October 2015 as a food delivery app in Lahore, starting with 15 riders. In February 2019 its founder, Ahmed Khan, told Profit that it now ran a dedicated fleet of more than 50 motorbikes and had cracked about 20 percent of the Lahore market, an estimate he described as rough. In November 2017 it had raised $1.1 million from US based investors and venture capitalists, taking its total since launch to close to $2 million. It listed nearly 300 restaurants, took cash on delivery and gave customers a GPS map to track orders.

Khan chose food because everybody orders it, and he called it the hardest challenge in logistics. The reasoning was that a company able to deliver hot meals on time could deliver anything. Cheetay earned a commission on what it sold plus a delivery fee, and held no stock. Khan stressed what he called positive unit economics, meaning every order had to earn a gross profit. The technology was built with the Lahore engineering firm Arbisoft.

The rivals were large. Foodpanda dominated food delivery, and Careem, Uber Eats and Eat Mubarak were also in or entering the market. Khan's plan was to grow by selling more categories, such as books, health products and groceries, to customers who already ordered food.

The 2019 round

In September 2019 Cheetay announced $7.8 million from US based investors it did not name. Khan said the money came from individuals and a large fund, the company's first institutional investor. It was the third tranche of a Series A that had already raised $3.8 million, bringing the round to $11.6 million, and Business Recorder called it the largest sum a Pakistani startup had raised in an early stage round.

The company now served Lahore, Karachi, Rawalpindi and Islamabad, with Peshawar, Faisalabad and Multan planned within a year. It reported more than 100,000 registered users and 3,000 vendors. Majid Khan had been appointed chief executive, and the company described itself as a multi category commerce business, selling food, beauty, baby care, health products and books.

What a payroll rider costs

This is the magazine's reading. A salaried rider is a fixed cost: the rider is paid whether the afternoon is busy or empty, whereas a freelance rider is paid per delivery. An employed fleet gives a company control over quality and delivery times, but it pays off only when each rider carries enough orders every hour.

A rough check shows the scale. If each of the 50 motorbikes mentioned in February 2019 made three deliveries an hour across a ten hour day, which is our assumption and not a company figure, the fleet could carry about 1,500 orders a day. Any claim about market share has to be tested against capacity like that. Registered users are also not active users, so the figure of 100,000 says little about how many orders each rider could expect.

The 2019 plan also multiplied the problem. Moving from one city to four, and then to seven, meant building a separate fleet in each, because a rider in Lahore cannot serve an order in Multan. Each new city starts with few orders per rider and needs months to reach the density that Lahore had. Of the $11.6 million raised by then, $7.8 million, about two thirds, arrived in that single round, so the expansion was largely paid for by one cheque. No source breaks down how much of it went to fleet, stock or technology. Reports also do not say how the April 2021 round raised by the parent company, Jabberwock Ventures, was split between Cheetay and its sister company Swyft.

From food to dark stores

According to Profit's January 2024 report, Cheetay was cofounded in 2015 by the brothers Ahmed and Majid Khan. At the start of the pandemic it added grocery delivery, then dropshipping from physical stores, then a quick commerce model built on dark stores. In April 2021 its parent company, Jabberwock Ventures, reportedly raised just under $20 million in a Series B. Profit said the round was raised by the parent, not by Cheetay or its sister company Swyft Delivery Solutions alone.

Dark stores raise the stakes of the fixed cost problem. A dark store is a small warehouse that takes online orders only, and its rent, staff and stock have to be paid before the first order arrives. The model works only where repeat demand is dense enough to keep the shelves turning, and the riders who serve it are another fixed cost on top.

The wind down

Profit reported that Cheetay let go of about half its staff in late 2023. Food delivery had already closed, leaving only a restaurant aggregator, and the company was planning a permanent shutdown that would include quick commerce. A formal statement was expected. An anonymous Cheetay official was quoted as saying that as a business it no longer made sense. The report cited the high burn of quick commerce, weak demand for grocery delivery, Pakistan's inflation and a global shortage of risk capital.

Cheetay's claim to beat Foodpanda rested on owning the delivery, and owning the delivery meant fixed costs that only a high order density could cover. It raised enough to try, and not enough to wait for the density to arrive. Competitors that paid riders per delivery could wait out a slow quarter at far lower cost, and that is the difference the 2019 pitch put on the table. We could not find a published closure statement, so the last dated facts on record are the ones in that January 2024 report: half the staff gone and a shutdown plan waiting for an announcement.