Do not see any innovation in food delivery; Business not under any obvious threat: Eternal’s Deepinder Goyal

Deepinder Goyal, co-founder and Group CEO, Zomato (now Eternal)

Deepinder Goyal, group CEO of Eternal, the parent of food delivery company Zomato, said he does not see any innovation in the space which makes him believe that his company’s core business is under any obvious threat at the moment.

“New ideas, new entrants and disruption are all inevitable. I think it also makes our business stronger as long as we are able to learn, adapt and out-innovate potential competition,” Goyal said in the letter to shareholders.

While Goyal did not take names, he was likely referring to Rapido’s foray into food delivery. The Swiggy-backed company is set to expand food delivery offerings in Bengaluru and other cities with an aim to disrupt the Zomato and Swiggy duopoly.

Unlike the incumbents, Rapido said it will work with restaurants on a subscription basis instead of a commission basis. Swiggy and Zomato have take rates of 20 to 30 percent per orders, which is bleeding the P&L of companies, stakeholders have said in the past.

Eternal’s chief however does not see any threat.

“At this point, we do not see any innovation in the space which makes us believe that this business is under any obvious threat,” Goyal said.

His views, on the sector growing because of more players, are similar to that of Swiggy chief Sriharsha Majety.

“It'll be interesting to see if there's an alternate take to food delivery that can grow the category some more, because we're waiting for some more growth as well,” Majety had told investors in London at a capital markets event hosted by Prosus, one of the investors in Swiggy and Rapido.

“We're definitely super agile and paranoid. And these are reactions that we're going to make. If we see a new opening that's going to be exciting, then we're going to be all over it,” Majety had said.

Swiggy also holds around 11-12 percent stake in Rapido, which translates to $120-130 million at the current valuation of $1.1 billion.

Majety, however, cautioned that Rapido’s entry won’t be all smooth sailing. There were around 20 food delivery players around 2015-17 when Swiggy was starting out, and since then several players such as Foodpanda, Uber Eats, Amazon Foods have all folded up.

“It is not easy to just get an opening that you can go take a home run with,” Majety said when asked about his take on Rapido’s food delivery foray. These comments come at a time when both Swiggy and Zomato have seen their food delivery businesses growing at a more benign pace.

Majety said Swiggy will seize a business opportunity when it arises. “We're not going to wait and watch,” he added.