Rapido's food delivery entry unlikely to dent duopoly, say brokerages
Rapido's foray into food delivery through a pilot in Bengaluru is unlikely to materially disrupt the entrenched duopoly of Zomato and Swiggy, multiple brokerages said in separate notes, citing the operational complexity, capital intensity and customer experience challenges inherent to the business.
TOI reported on Monday, Bengaluru-based Rapido is currently preparing to launch its food delivery service with a fundamentally different pricing structure, choosing flat fees over traditional percentage commissions charged to restaurants. The move positioned the ride-hailing firm as a challenger to Zomato and Swiggy at a time when small restaurant owners are increasingly vocal about rising aggregator costs.
Rapido plans to charge a fixed Rs 25 on food orders below Rs 400 and Rs 50 for those above. These charges are flat fees deducted from the order value, paid by the restaurant to Rapido.
Bernstein's Rahul Malhotra noted that while Rapido plans to leverage its over 3 million rider base and charge lower take rates, 'new entrants have been unsuccessful in the past.' Malhotra cited prior attempts by Amazon, Ola and ONDC that failed to scale due to limited restaurant selection, fragmented supply, and weak customer experience.
He added that India's food delivery market, dominated by Zomato and Swiggy with 54% and 46% market shares respectively, has become operationally complex with over 200,000 to 300,000 restaurants, posing high barriers to scale for new players.
Elara Capital's Karan Taurani acknowledged Rapido's cross-utilisation model, where its rider network may reduce incremental capital expenditure. However, Taurani warned that 'the absence of a dedicated fleet may compromise the delivery experience, especially with rising sub-30 minute delivery expectations.'
Elara's sensitivity analysis suggested that even a moderate impact from Rapido could lead to a 6% cut in the target price of Eternal (Zomato), should revenue growth or valuation multiples weaken due to pricing pressures.
HSBC analysts Yogesh Aggarwal, Prateek Maheshwari and Sagar Desai pointed out that while the underlying cost structures of two-wheeler ride-sharing and food delivery are similar, scaling food delivery demands sustained execution.
They argued that "customer experience, ability to execute, and achieving scale remain key challenges" for Rapido. The analysts also flagged that long-term industry growth is already moderating, with most of the incremental demand expected to come from higher order frequencies rather than significant customer base expansion.
Kotak Institutional Equities, in its sector alert, described Rapido's entry as having 'no immediate impact' on the incumbents. It reiterated that Zomato and Swiggy have built significant operational moats in logistics, customer loyalty, and dense restaurant partnerships, making material share shifts unlikely in the near term.
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