Rapido Ventures into Food Delivery, Backed by $600 Million Funding

Rapido, the urban mobility firm, is entering the crowded Indian food delivery market with its new platform, Ownly. This expansion comes with a significant $550 million to $600 million funding round led by Prosus, and includes investments from Accel's India arm and WestBridge Capital. The move aims to create new revenue streams beyond Rapido's main ride-hailing and logistics services. The company plans to use its large rider network for Ownly, focusing on low commissions and strong restaurant ties, differing from the heavy discounts often used by existing players.

Funding Boost and Initial Rollout

The funding round, which reportedly values Rapido around $3 billion, includes money for both selling new shares and existing shareholders. This financial support is key as Rapido begins its food delivery service in Bengaluru, with plans to expand later. Rapido is choosing not to rely heavily on discounts to start. Instead, it aims to build its restaurant network through partnerships and use its existing drivers. This approach could lower costs if drivers can be used efficiently across different services.

The Crowded Indian Food Delivery Market

The Indian food delivery market is expected to grow significantly, with projections indicating a 21.62% annual growth rate between 2026 and 2034. This makes it a highly competitive space. Zomato and Swiggy are the leading companies, having refined their operations and profit per order over time. Zomato, a publicly traded company, reported over ₹21,320 crores in revenue for FY25, with its food delivery division holding a 58% market share. Zomato has become profitable, maintaining net profits through FY2025, supported by its food delivery, quick commerce (Blinkit), and B2B (Hyperpure) operations. While Zomato's revenue has grown well, its stock valuation is high, suggesting investors expect continued growth and profits.

Rapido's Strategy vs. Incumbents

Adding food delivery could be a smart move for Rapido to expand its urban mobility network. By offering food services, it might increase order numbers and make better use of its drivers. However, rivals like Zomato are expected to respond strongly. Zomato, for example, has used methods like subscription programs, operational improvements, and faster delivery to boost its profitability per order. While Rapido plans a low-commission approach, paying to attract and keep customers and restaurants is difficult in a market where value is key. Gaining significant market share from established companies will likely take a long time and require a lot of resources.

Challenges and Risks Ahead

Rapido faces significant risks with its food delivery expansion. The main difficulty is entering a market where Zomato and Swiggy already have large delivery networks, customer loyalty, and advanced prediction tools. These existing companies are constantly working to improve their profit margins. Zomato's Q2 FY26 results, showing a ₹65 crore profit on ₹13,590 crore revenue, highlight these pressures despite revenue growth. Rapido's plan to offer fewer discounts might not be enough if competitors step up their value offers or loyalty programs. Also, managing a single fleet of riders for ride-hailing, logistics, and food delivery presents complex operational challenges and execution risks. Gaining significant market share will need substantial investment and a strong offer that can change how consumers and restaurants behave, which has been hard for many new companies.

Future Outlook

The Indian online food delivery market is set to continue growing strongly, fueled by more people living in cities, greater internet access, and changing lifestyles. While this growth creates opportunities, it also means tougher competition. Rapido's arrival adds another company to this active market, which could shift how competitors interact. However, Rapido's success will depend on its ability to find a lasting place in the market by standing out through service and efficiency, rather than just price. This will be key when competing against market leaders who are also constantly improving and focusing on profitability.