India’s Food Delivery Industry: Hot or Not?

India’s Food Delivery Industry

The Indian food industry is massive. The digital transformation of the Indian food delivery sector has dramatically benefited it and significantly impacted the country’s food delivery market.

Industry Insights

The market size for the food-delivery industry was $4 billion in 2020, which is expected to reach $12 billion by 2026, registering a CAGR of 19%. As of 2020, India had 27 million active food delivery users with an order frequency of 3.2 orders/month and an average order value of Rs 300. All these metrics are only going to rise upwards in the future!undefined

Market Dominators

Regarding the food delivery industry, the Zomato-Swiggy duo is the dominator!

As of FY22, the Gross Merchandise Value (GMV) of Zomato stood at $2.8 billion, with 1.95 lakh restaurant partners and 3 lakh delivery partners. While for Swiggy, the GMV stood at $2.3 billion, with 2.05 lakh restaurant partners and 3.16 lakh delivery partners.

Key Risks

With greater dominance comes more significant challenges.

For instance, a food item a restaurant sells for Rs 100 would be listed on Zomato and Swiggy for Rs 130 or more. Due to their vast commissions, restaurant partners are launching ‘Direct Order’ campaigns so that they can charge lower prices for their food. Also, both Swiggy and Zomato are reluctant to share customer data with their restaurant partners.

However, direct orders still constitute only 7-8% of overall delivery volumes but pose a threat to Zomato and Swiggy.

Then there are other emerging competitors like Dunzo, Eat Sure, and Google-backed DotPe, which can lead to heated competition.

What’s in It for Investors?

Regarding their size and delivery network, Zomato and Swiggy are dominant, and restaurants still depend on them. The food delivery segment is also set to grow from here on.

But increased competition from rivals and restaurants launching their direct order campaigns could lower profit margins, leading to delayed breakeven for Zomato and Swiggy, which are currently loss-making.

Teji Mandi Multiplier Portfolio

Teji Mandi Multiplier

A basket of stocks of small and mid-sized public companies. This portfolio holds the potential to secure larger returns in the future as the companies grow.

1Y CAGR

Min. Investment

Subscription Fee

₹399/month for 6 months

Teji mandi Flagship portfolio

Teji Mandi Flagship

A basket of 15-20 long-term and tactical stocks that are rebalanced regularly to adjust to the market changes.

1Y CAGR

Min. Investment

Subscription Fee

₹99/month for 12 months

Recommended Articles

"Register Your Interest"

Already a member ? Log In