West Asia war: Swiggy, Eternal brace for impact as gas shortage hits restaurants in India

The executive said it was too early to assess the exact impact on order volumes. “Honestly, the worst case may not even happen,” he said.

India’s two largest food delivery platforms, Swiggy and Eternal, may see a decline in order volumes as more restaurants recalibrate operations following limits on cooking gas supplies triggered by the West Asia war, industry stakeholders told Moneycontrol.

The situation initially did not warrant Swiggy and Zomato (part of Eternal) to account for disruptions. “There is a very low probability,” a top executive at a major food delivery firm had told Moneycontrol at around 9 pm on March 9 when asked about the potential impact of the war on their business.

However, Moneycontrol exclusively reported Oil Marketing Companies (OMCs) have instructed liquefied petroleum gas (LPG) distributors to supply commercial cylinders only to hospitals and educational institutions, temporarily halting sales to hotels, restaurants and other commercial establishments, the sentiments changed.

“I revise my view. This may actually be impacting (our business). We have started seeing some messages from restaurants across,” the same executive said two hours later, at about 11 pm, reflecting how quickly the situation was evolving prompting food delivery majors to draw up contingency plans.

Swiggy, Zomato and Rapido’s Ownly did not reply to Moneycontrol’s queries around the potential impact of the war.

While Eternal's shares had ended the March 9's trade session down 1 percent at Rs 229.55 apiece, Swiggy's share prices were flat to trade at Rs 301.40 each on the BSE.

However, the executive cited above said it was too early to assess the exact impact on order volumes. “Honestly, the worst case may not even happen,” he added.

Second order impact

Restaurant kitchens across several Indian cities are scrambling to keep their stoves running as supplies of commercial liquefied petroleum gas (LPG) cylinders have suddenly tightened. Operators warn that if the shortage persists, restaurants may have to scale down operations or temporarily shut kitchens.

The disruption comes as the ongoing Israel–Iran war has affected LPG shipments from the Middle East, a key source of cooking gas imports for India.

The longer the wait, the larger the damage.

Even if the war situation is sorted out tomorrow, it will take restaurants 30-60 days to go back to normalcy.

“More importantly, the spend per head will reduce because people will choose to save more money and reduce expenditure when prices are going up,” Pranav Rungta, founder of Churchgate Hospitality, said.

In an inflationary environment, spending on discretionary items like outside food, including ordering in, also takes a back seat.

“Footfalls won’t reduce because people who rely on outside food will still walk in but they will eat lesser and the amount spent per meal will come down if the situation remains like this for 7-10 more days," Rungta added.

In all, an increase in gas prices, and an eventual rise in the cost of raw materials because of higher transportation costs, will also be passed on to the end consumer which will further deter people from ordering in and eating out further impacting the results of Swiggy and Eternal.