Analysts believe that Rapido’s foray into food delivery is not likely to disrupt the Zomato-Swiggy duopoly, citing the operational complexities of the business and entrenched market dynamics that advantage established players while presenting significant obstacles for newcomers attempting to grow.

Bernstein published a research note on June 11, stating that similar endeavors in the past—by Amazon, Ola, and the government-supported ONDC—have not succeeded in capturing a significant market share.  These players faced challenges due to inadequate restaurant choices, variable customer experiences, and the difficulties of overseeing fragmented supply chains in India.

In a different report, HSBC expressed similar concerns. It stated that although the economics of two-wheeler ride-sharing are similar to those of food delivery, preserving customer experience, effective execution, and reaching scale are major challenges.

The report observed that although newcomers might manage to obtain the industry’s tail-end clients—where profit margins are already low—they will probably not disturb the duopoly at the top.

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Following reports of the bike taxi and mobility startup’s plan to launch a pilot in Bengaluru, Swiggy and Zomato-parent Eternal’s stocks have been trading lower.

Eternal appears to have bounced back, with its trading value on the National Stock Exchange at Rs 257.68 at 12:45 PM, reflecting an increase of 0.78% from the day before.  Swiggy, on the other hand, declined by nearly 2 percent to Rs 355.05.

Rapido, which has amassed approximately $600 million to date, intends to utilize its fleet of 3 million and impose a reduced take rate of 8–15 percent on restaurants.  Zomato and Swiggy have fees ranging from 18 to 20 percent.

As per Rapido’s proposal to restaurants, which Moneycontrol has previously examined, the new vertical named “Ownly” will target meals that cost less than Rs 150 and provide a zero-commission model.  The company aims to establish itself as a low-cost platform for “Bharat,” with commitments to offline-equal pricing, minimal cost layers, and the absence of packaging fees or platform commissions.

This month’s end will see the launch of the pilot in Bengaluru, and Rapido has required its restaurant partners to provide a minimum of four budget-friendly meal options costing no more than Rs 150.

Bernstein estimates that the average food order in India is Rs 400–500, with delivery costs around Rs 50–60. In contrast, HSBC estimates the average order value (AOV) at approximately Rs 350 and per-order delivery costs at Rs 65–70, which are slightly higher.

The analysts at Bernstein stated that the economics at Rapido’s suggested commission rates would lead to “very low profitability without the ability to reinvest into operations or expansion.”   According to the report, “Food delivery is an operationally intensive business,” and platforms must negotiate with over 200,000–300,000 restaurants to create a sufficient supply.

India’s food delivery market is characterized by fragmentation, with organized quick-service restaurants contributing only about 10 percent of the gross order value (GOV), while the remainder comes from smaller establishments. This situation complicates efforts for newcomers to achieve scale.

According to Bernstein, Zomato and Swiggy have previously invested $2–3 billion in developing their food delivery infrastructure, resulting in robust customer bases and brand loyalty.

In the fourth quarter of FY25, Zomato boasted approximately 314,000 monthly active restaurant partners, while Swiggy had 252,000.

Bernstein, referencing internal estimates, calculated the division of the food delivery market as 54 percent for Zomato and 46 percent for Swiggy.

According to the note, Swiggy has been increasing its market share in recent quarters, with its food delivery GMV rising 18% year-on-year in Q4FY25, surpassing Zomato’s 16%.

“The analysts noted that Rapido’s entry would not significantly affect market share, as the service would initially be limited to Bengaluru and in a trial phase.

Rapido might be able to onboard restaurants that have not been previously utilized, especially those with low average order values (AOV) in Tier 2 and 3 cities.

However, Bernstein noted that this would expand the overall market rather than reduce the customer base of existing players.

HSBC noted a resemblance as well, dubbing the present circumstances a “déjà vu” for the food delivery sector, which encountered analogous anxieties amid ONDC’s emergence in 2023.

It pointed out that Zomato’s present delivery charges exceed dine-in prices by 30–35 percent, and total consumer expenses—encompassing delivery and platform fees—are among the highest in the world.

Zomato’s EBITDA margins of only 4.4 percent underscore the limited profitability even at scale, despite this factor.

According to Bernstein, although smaller restaurants may be initially attracted to Rapido’s lower commission model, the company will probably have to increase its take rates over time in order to maintain operations.

The company continues to be unprofitable, despite having the backing of investors like Swiggy, which has a 12–13 percent ownership stake.

“Rapido’s model does not currently support reinvestment or scale expansion, especially in lower-penetration Tier 2 cities where growth opportunities exist,” the report stated.

Rapido has announced that it will eventually adopt a flat subscription model for restaurants, while maintaining a commission-free approach for food delivery.  The company will also permit advertising on the platform and share user data with restaurant partners to assist in marketing campaigns.

To maintain low prices for consumers, it will currently cover initial delivery costs, applying a flat charge of Rs 25 (plus GST) for orders exceeding Rs 100 and Rs 20 for lesser orders — these charges are to be paid by restaurants.

Bernstein kept an “outperform” rating for Zomato and Swiggy.  It identified Zomato as its leading choice, with a target price of Rs 280 (implying a 21 percent upside), due to robust execution and market share growth in quick commerce.

Swiggy’s target was established at Rs 435, reflecting a 35 percent implied upside, bolstered by its momentum in food delivery and rapid commerce.

“Although the launch of Rapido provides an alternative model, the structural advantages of incumbents remain unchanged,” Bernstein said.