Food-tech giants Swiggy and Zomato adopt different strategies in recovering dine-out market; Swiggy eyes profitability, Zomato prioritizes scale.

Consumer Products

2nd November 2025, 1:01 PM

Food-tech giants Swiggy and Zomato adopt different strategies in recovering dine-out market; Swiggy eyes profitability, Zomato prioritizes scale.

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Stocks Mentioned :

Zomato Limited

Short Description :

Food-tech majors Swiggy and Zomato are taking distinct approaches to the reviving dine-out sector. Swiggy's dine-out arm achieved its first operating profit in Q2 FY26 with ₹1,118 crore Gross Order Value and a 0.5% Ebitda margin. In contrast, Zomato is expanding its broader "District" business, which includes dining, events, and retail, prioritizing scale over immediate profit. Zomato's "District" reported growth but remains loss-making, with a 3.1% Ebitda loss. The dine-out recovery is attributed to office reopenings, consumer spending shifts, and loyalty programs, though concerns about deep discounting persist.

Detailed Coverage :

Divergent Paths in Dine-Out Recovery: Swiggy Achieves Profitability, Zomato Focuses on Scale

The Indian dine-out economy is showing renewed strength, with food-tech leaders Swiggy and Zomato pursuing contrasting strategies. Swiggy's dine-out division has achieved a significant milestone, reporting its first-ever operating profit in the second quarter of fiscal year 2026. The business posted a Gross Order Value (GOV) of ₹1,118 crore, a substantial 52% increase year-on-year, and a modest positive Ebitda margin of 0.5%, translating to a ₹6 crore profit. This marks a turning point after previous losses.

Meanwhile, Zomato (referred to as "Eternal" in the source text) is focusing on building scale through its "District" business. This segment encompasses dining, events, and retail, and while it grew by approximately 32% year-on-year, it continues to operate at a loss. In Q2 FY26, Zomato's "District" recorded an Ebitda margin of -3.1% and a quarterly loss of ₹63 crore. Zomato's revenue base for this segment is higher at ₹189 crore, reflecting its broader business mix compared to Swiggy's ₹88 crore, but also higher operational intensity.

Analysts point to office reopenings, consumer premiumisation, and loyalty programs as key drivers for the dine-out recovery. However, the sustained reliance on deep discounting by platforms and restaurants poses a challenge to long-term profitability. While dine-in offers better margins for restaurants than delivery, the industry faces ongoing discussions regarding fair trade terms and aggregator fees.

Impact: This news is highly impactful for the Indian stock market. It highlights strategic shifts and financial performance of major players in the consumer discretionary sector. Swiggy's profitability signals a maturing business model, while Zomato's growth-at-all-costs approach, though currently loss-making, aims for broader market dominance. The recovery in dine-out spending is a positive indicator for the broader economy and related businesses. Rating: 8/10.

Difficult Terms: * Gross Order Value (GOV): The total value of all orders before deducting discounts, taxes, or commissions. * Net Order Value (NOV): The total value of orders after deducting partner commissions and discounts, reflecting a platform's net revenue from orders. * Ebitda: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. A positive Ebitda margin indicates profitability from core operations. * Ebitda Margin: Ebitda expressed as a percentage of revenue, showing operational profitability. * Consumer Premiumisation: A trend where consumers are willing to spend more on higher-quality or premium products and services. * Quick Service Restaurants (QSRs): Restaurants that offer fast food and have a quick turnaround time for orders. * Aggregators: Companies that facilitate transactions between consumers and service providers, such as food delivery platforms. * GST Rationalisation: The process of simplifying or adjusting Goods and Services Tax rates or structures.