The Indian food delivery space is now seeing a new name—Rapido, known till now as a bike taxi and logistics service provider, has officially stepped into the food delivery business. The company aims to offer low-cost meals and challenge the current big players like Zomato and Swiggy, who together control nearly the entire market.
But can Rapido’s unique model make a dent in this highly competitive sector? Or will it just add some flavor without shaking the real market? Let’s break it down.
Rapido’s New Move: What’s the Strategy?
Rapido has launched a new vertical under the name ‘Ownly’, targeting customers looking for affordable meals under Rs.150. The company wants to operate on a zero commission model, meaning it won’t charge extra packaging fees or platform charges. Restaurants will pay a much lower commission of around 8–15%, compared to 18–20% that Zomato and Swiggy currently take.
Rapido has already raised close to $600 million in funding and plans to use its 3 million+ driver network for deliveries. The first pilot phase is being run in Bengaluru, where selected restaurants can list at least four budget-friendly dishes.
This approach is expected to attract small and medium-sized food businesses, especially in Tier 2 and Tier 3 cities.
The Ground Reality: What Experts Say
According to a detailed report by brokerage firm Bernstein, Rapido’s entry, though interesting, is unlikely to impact the dominance of Zomato and Swiggy. Their analysis suggests several practical hurdles that any new player would face:
- High operational costs
- Tough customer expectations
- Limited margins on low-value food orders
- Complex supply chain handling
Even big players like Amazon, Ola, and ONDC tried to enter this market in the past but failed to build scale. Rapido’s low-fee model may appeal to local eateries, but running a delivery system for food is far more complicated than just moving people or parcels.
Profitability May Be a Long Journey
While Rapido’s new model is friendly for restaurants and customers, it may not be financially sustainable in the long run.
Currently, Rapido will cover the delivery cost of Rs.15–20 per order. Restaurants won’t be charged any extra fee, but GST will still be collected from them. The company is operating at a loss for now and may eventually switch to a flat subscription fee for restaurants, along with ad services and access to user data.
If the company does not revise its pricing model soon, it may struggle to cover the costs of delivery, logistics, and customer service. Swiggy itself owns a 12–13% stake in Rapido, which could mean they are not worried about competition but more about expanding the overall market reach.
Zomato and Swiggy: Still Strong and Growing
Zomato and Swiggy have invested over $2–3 billion each in the food delivery ecosystem in India. Their dominance is built on strong supply chains, restaurant partnerships, customer loyalty, and tech-enabled platforms.
As of Q4 FY 2024–25:
- Zomato has around 3.14 lakh active restaurant partners
- Swiggy has around 2.52 lakh
Bernstein reports that:
- Zomato holds 54% market share
- Swiggy has 46%
So far, Rapido’s food delivery business is limited to Bengaluru, and even if it expands, it may only attract a new set of restaurants rather than stealing partners from the existing giants.
Low Price Focus Might Expand Market, Not Disrupt It
Analysts believe that instead of breaking the dominance of Zomato and Swiggy, Rapido might actually grow the market. Their unique pricing model and affordable food focus could bring in:
- New customers from budget-sensitive segments
- More restaurants from Tier 2 and Tier 3 cities
- Small eateries that previously avoided high commission fees
But the average food order in India is around Rs.400–500, and delivery costs eat a big part of this. Rapido is targeting orders below Rs.150, where profit margins are razor thin.
Without a strong value chain and delivery support, it may be hard for Rapido to maintain service quality, which is key in this industry.
Market Reaction: What Are Investors Saying?
After the news of Rapido’s entry:
- Zomato’s parent company Eternal saw a minor rise in share price
- Swiggy’s shares saw around 2% fall
However, Bernstein has kept an “Outperform” rating for both:
- Zomato Target Price: Rs.280 (21% potential upside)
- Swiggy Target Price: Rs.435 (35% upside)
This shows that while investors acknowledge Rapido’s new idea, they still trust the strength and reach of Zomato and Swiggy in this space.
What to Expect Ahead
Rapido’s food delivery attempt brings a fresh and budget-friendly model, which could be useful in specific local markets. If executed well, it might serve small-town India and low-income users who want fast food at reasonable prices.
However, sustaining operations without higher margins or strong tech support may limit its growth. Meanwhile, Zomato and Swiggy will continue to innovate and hold their share unless a major disruption happens.
Disclaimer: This article is for information purposes only. Readers should do their own market research or consult financial experts before making investment decisions.
Sources: Bernstein, Zee Business, Rapido, Zomato, Swiggy
