Rapido likely to run food delivery pilot in Bengaluru soon
Rapido
is expected to launch a pilot programme for its food delivery service in Bengaluru in the coming weeks, said people briefed on the developments.
To begin with, the WestBridge Capital-backed company is planning to tap into larger restaurant chains and has been in discussions with the likes of India franchisee operators of McDonald's, KFC and Pizza Hut, as well as other
quick service restaurants
and cloud kitchen chains that see high order frequency.
'Initially, the focus will be on delivering from larger restaurant chains for a shorter distance. These chains have among the most dense networks of outlets in top cities from where deliveries of up to 5 km can be made,' said one of the persons, who did not wish to be identified. 'A substantial part of the orders come from these large chains whereas the long tail of smaller outlets gives a broader choice to the consumers.'
For the quarter ended December 2024,
Zomato
had 306,000 average monthly active restaurant partners for food delivery, while
Swiggy
– which is one of the investors in Rapido – had 243,400. Swiggy and Rapido have Dutch investor Prosus as a common backer.
'Zomato and Swiggy have around Rs 400-450 AOV (average order value) for their food delivery… and even though they've started low-cost, pocket friendly options to expand their TAM (total addressable market), there's a very large base of consumers to be tapped into where AOVs will be not more than Rs 250, where Rapido will have its play,' said another person.
'Many restaurants increase prices while listing on aggregators to adjust for the commission that is levied on them. The subscription model lowers the cost for the restaurants that can be passed on to the consumers,' this person added.
ET was the first to report, on March 12, about Rapido entering the food delivery segment, saying the company will take the subscription model route that it has deployed for four-wheeler ride-hailing.
Rapido will charge restaurants a fixed periodical subscription fee for access to the platform and a per order delivery fee, against a percentage commission rate levied by incumbent operators Zomato and Swiggy, according to people in the know.
Rapido did not respond to queries emailed by ET.
Game plan
For the Bengaluru-based company, which closed a $200-million round led by WestBridge Capital in September 2024, the focus is on finding new areas of growth, with food delivery and insurance distribution being on the cards.
The company crossed $1 billion in gross merchandise value last fiscal.
'Rapido has grown fast in ride-hailing thanks to the subscription model in three-wheelers and four-wheelers… but it has managed to show this growth because it's come late and is displacing the likes of Ola in the market. The ride-hailing market itself, however, isn't growing that rapidly, making it imperative for the company to find new streams for future growth,' said an investor.
ET had reported on April 1 that in the four-wheeler ride-hailing segment, Rapido had more than 20 per cent market share (and growing), with Uber having 50 per cent and Ola 30 per cent share.
However, the startup's move into food delivery comes at a time when growth in the food delivery segment, which is the biggest revenue generator for Zomato and Swiggy, has been slowing.
In an interview with ET last month, Deepinder Goyal, CEO of Zomato-parent
Eternal
, had flagged systemic issues with the food delivery segment, indicating that the publicly listed company would take fresh initiatives to address these hurdles.
As per brokerage firm Bernstein, Gurgaon-based Zomato has a 57.1 per cent market share in food delivery while Swiggy has the remaining 42.9 per cent .
The segment has also seen new players and services being introduced over the past few months, especially for 10-minute food delivery. These include offerings from quick commerce companies including Zepto and Eternal-owned Blinkit, in addition to standalone players such as Accel-backed Swish.
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