New Delhi— The entry of ride-sharing platforms into India’s food delivery market is raising early concerns for established players like Zomato and Swiggy, according to a report by HSBC Global Investment Research. With companies like Rapido stepping into food delivery this month, analysts warn that the newcomers could disrupt the current duopoly by operating at minimal or no margins during their early years.
Unlike last year’s ONDC initiative, which failed to significantly impact the food delivery landscape, ride-sharing firms may present a more formidable challenge due to overlapping cost structures and more scalable models.
The report notes that the economics of two-wheeler (2W) ride-sharing are similar to food delivery. The average order value (AOV) for 2W rides is around ₹70, with a contribution margin (CM) of ₹3–4. In contrast, food delivery generates revenues of ₹100+ per order for Zomato, with similar delivery costs, making it a more lucrative market for entrants.
“Food delivery is a more attractive vertical, given its higher margins and larger market size compared to ride-sharing,” the report stated. However, new entrants must still overcome challenges related to customer experience, operational execution, and scaling.
While newcomers may initially capture the less profitable segment of the market, their ability to operate at break-even or even subsidized rates could put pricing pressure on incumbents. The report estimates that these platforms could offer restaurants a 4–5% cost advantage or provide free delivery to customers.
Currently, Zomato delivers roughly 2.6 million orders daily and maintains an EBITDA margin of 4.4%. Food delivered via platforms is already priced about 30–35% higher than dine-in rates. Even after discounts, restaurants charge 15–20% more to customers using delivery apps.
“Zomato, in turn, collects a take-rate of about 25% from restaurants and charges an additional 4–5% delivery fee to customers—among the highest globally,” the report noted.
While it remains to be seen how significant the threat will become, the early signals suggest that ride-sharing companies may force a shift in pricing and margins across India’s competitive food delivery space. (Source: IANS)
