Rapido Takes a Bite of Food Delivery Market, Duopoly Unmoved

Several brokerages stated in separate notes that Rapido's entry into the food delivery market through a pilot in Bengaluru is unlikely to significantly upend the established duopoly of Zomato and Swiggy due to the business's intrinsic operational complexity, capital intensity, and customer experience issues.

Bengaluru-based Rapido is getting ready to start its meal delivery service with a radically different price structure, opting for flat costs rather than the customary % commissions given to restaurants, according to a media report.

At a time when small restaurant operators are becoming more outspoken about growing aggregator expenses, the move put the ride-hailing company in a position to compete with Zomato and Swiggy.

For food orders under INR 400, Rapido will impose a set INR 25 fee; for orders beyond INR 400, the fee will be INR 50. The restaurant pays Rapido these fixed fees, which are subtracted from the order amount.

Rahul Malhotra of Bernstein, a premier global equity research and brokerage firm, pointed out that although Rapido intends to use its user base of more than 3 million to charge reduced take rates, new competitors have failed in the past. Malhotra pointed to earlier attempts by Ola, ONDC, and Amazon that didn't scale because of a poor user experience, a fragmented supply, and a small range of restaurants.

Fragmented Food Delivery Market of India

With only about 10% of gross order value (GOV) coming from organised quick-service restaurants and the remainder from smaller eateries, India's food delivery sector is fragmented, making it more difficult for entrants to reach scale.

Zomato and Swiggy, according to Bernstein, have already spent $2–3 billion developing their meal delivery networks and enjoy a large following of loyal customers. Swiggy had 252,000 active restaurant partners, while Zomato had over 314,000 as of Q4 Q4FY25. According to internal estimations, Bernstein estimated that Zomato and Swiggy held a 54% and 46% share of the meal delivery market, respectively.

Swiggy Leading the Race

Swiggy has been gaining market share in recent quarters. In Q4 Q4FY25, its food delivery GMV grew 18% year over year, surpassing Zomato's 16% growth. The analysts said, "We do not anticipate material market share impact from Rapido's entry," noting that the service would initially be in a trial phase and would only be available in Bengaluru.

Bernstein stated that although Rapido might be able to attract previously unexplored eateries to its platform, especially those with low average order values (AOVs) in Tier 2 and Tier 3 cities, this will increase the market as a whole rather than reduce the number of customers that the incumbents have.

In a similar vein, HSBC referred to the current state of affairs as "déjà vu" for the food delivery sector, which had comparable anxieties during ONDC's ascent in 2023.