Rapido’s entry into food delivery is unlikely to disrupt the Zomato-Swiggy duopoly, say analysts, pointing to the operational complexity of the business and deep-rooted market dynamics that favour incumbents and pose steep challenges for new players trying to scale.
According to a research note by Bernstein on June 11, similar attempts in the past—by Amazon, Ola and the government-backed ONDC—have failed to gain meaningful share. These players struggled with poor restaurant selection, inconsistent customer experience, and the complexities of managing fragmented supply chains in India.
HSBC, in a separate report, echoed similar concerns. It said while the economics of two-wheeler ride-sharing are comparable to food delivery, maintaining customer experience, execution, and achieving scale remain significant hurdles.
The report noted that while new entrants may be able to acquire the industry’s tail-end customers—where margins are already thin—they are unlikely to disrupt the duopoly at the top.
Swiggy and Zomato-parent Eternal’s stocks have been trading lower following reports of the bike taxi and mobility startup’s plan to launch a pilot in Bengaluru.
Eternal seems to have recovered and was trading at Rs 257.68 on the National Stock Exchange at 12,45 pm, up 0.78 percent from the previous day. Swiggy, however, was down almost 2 percent at Rs 355.05.
Rapido, which has raised around $600 million so far, plans to leverage its 3 million-strong fleet and charge restaurants a lower take rate of 8–15 percent. Zomato and Swiggy charge 18–20 percent.
According to Rapido’s pitch to restaurants, reviewed earlier by Moneycontrol, the new vertical, called “Ownly”, will focus on meals priced below Rs 150 and offer a zero-commission model. The company is positioning itself as a low-cost platform for “Bharat,” promising offline-equal pricing, minimal cost layers, and no packaging fees or platform commissions.
The pilot will begin in Bengaluru at the end of this month, and Rapido has mandated restaurant partners to list at least four affordable meals under Rs 150.
Operational scale, margins favour incumbents
While Bernstein estimates the average food order in India at Rs 400–500 with delivery costs of Rs 50–60, HSBC pegs the average order value (AOV) at around Rs 350, with per-order delivery costs slightly higher at Rs 65–70.
At Rapido’s proposed commission rates, the economics would result in “very low profitability without the ability to reinvest into operations or expansion”, the analysts at Bernstein said. “Food delivery is an operationally intensive business,” the report said, adding platforms need to negotiate with more than 200,000–300,000 restaurants to build sufficient supply.
India’s food delivery market is fragmented, with only around 10 percent of gross order value (GOV) coming from organised quick-service restaurants and the rest from smaller eateries — making scale harder to achieve for newcomers.
Bernstein said Zomato and Swiggy have already invested $2–3 billion in building their food delivery infrastructure and now command strong customer bases and brand loyalty.
As of Q4FY25, Zomato had around 314,000 monthly active restaurant partners and Swiggy 252,000.
Market share impact seen as minimal
Citing internal estimates, Bernstein pegged the food delivery market split at 54 percent for Zomato and 46 percent for Swiggy.
Swiggy has been gaining share in recent quarters, with its food delivery GMV growing 18 percent year-on-year in Q4FY25, ahead of Zomato’s 16 percent, the note said.
“We do not anticipate material market share impact from Rapido’s entry,” the analysts wrote, pointing out that the service would be restricted to Bengaluru and in a trial phase to begin with.
Even though Rapido may be able to bring previously untapped restaurants—particularly low average order value (AOV) outlets in Tier 2 and 3 cities—onto its platform, Bernstein said this will serve to expand the overall market rather than eat into the customer base of the incumbents.
HSBC made a similar observation, calling the current situation “déjà vu” for the food delivery industry, which faced similar fears during ONDC’s rise in 2023.
It noted that Zomato’s current delivery prices are already 30–35 percent higher than dine-in prices, with total consumer costs—including delivery and platform fees—reaching among the highest globally.
Despite this, Zomato only earns 4.4 percent EBITDA margins, highlighting how thin profitability already is, even at scale.
Profitability concerns
While Rapido’s lower commission model may appeal to smaller restaurants initially, it will likely need to raise take rates over time to sustain operations, Bernstein said.
The firm remains unprofitable, despite being backed by investors including Swiggy, which owns a 12–13 percent stake.
“Rapido’s model does not currently support reinvestment or scale expansion, particularly in lower-penetration Tier 2 cities where growth opportunities exist,” the report said.
Rapido has said it will eventually move to a flat subscription model for restaurants while keeping food delivery commission-free. The company will also allow advertising on the platform and share user data with restaurant partners to support marketing campaigns.
For now, it will bear initial delivery costs to keep prices low for consumers, charging a flat fee of Rs 25 (plus GST) for an above-Rs 100 order and Rs 20 for smaller orders — payable by restaurants.
Zomato and Swiggy top picks
Bernstein maintained an “outperform” rating on Zomato and Swiggy. It listed Zomato as its top pick with a target price of Rs 280 (21 percent implied upside), citing strong execution and market share gains in quick commerce.
Swiggy’s target was set at Rs 435 (35 percent implied upside), supported by its traction in food delivery and rapid commerce.
“While Rapido’s launch introduces an alternative model, the structural advantages of incumbents remain intact,” Bernstein said.
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