Rapido’s food delivery arm, Ownly, is set to enter six major Indian cities, including Delhi NCR and Mumbai, in the coming quarter. The company aims to disrupt the market with a zero-commission subscription model for restaurants, challenging incumbents like Zomato and Swiggy. Investors should monitor how this aggressive expansion impacts the company's cash reserves and delivery logistics efficiency.
Rapido, primarily known for its bike-taxi and ride-hailing services, is scaling its food delivery venture, Ownly, to reach six new major metropolitan regions. Following initial operations in Bengaluru, the company plans to launch services in Delhi NCR, Mumbai, Hyderabad, Kolkata, Pune, and Chennai by the next quarter. This expansion is a calculated move to enter the highly competitive food-tech space, which is currently dominated by industry leaders Swiggy and Zomato.
Disrupting the Commission Model
Unlike the traditional model where delivery platforms charge restaurants a percentage commission on every order, Ownly is built on a subscription-based framework. By removing these commissions, the company aims to partner with a larger number of restaurants that may have previously been deterred by the high costs of existing platforms. Aravind Sanka, CEO of Rapido, reported that Ownly has already onboarded approximately 25,000 restaurants in Bengaluru and is working toward a target of 50,000 to improve market coverage.
Strategy for Customer Acquisition
Ownly is positioning itself as a more affordable option for consumers, targeting an average order value that is roughly 60% of the current industry average. The company is leveraging the existing Rapido user base by integrating food delivery directly into its primary ride-hailing app, effectively turning it into a super-app. This strategy is designed to lower customer acquisition costs, as the company can cross-sell food delivery services to its existing ride-hailing passengers.
Operational and Execution Risks
While the zero-commission model is attractive to merchants, the company faces significant challenges in building a reliable logistics network at scale. Currently, Ownly is subsidizing delivery costs to maintain competitive pricing, a common but capital-intensive practice in the food delivery sector. The long-term viability of this model will depend on the company’s ability to eventually shift these logistics costs to consumers without causing a decline in order volume.
Furthermore, Ownly is moving toward direct partnerships with national restaurant chains, bypassing third-party onboarding services. Success in these six new cities will require effective merchant management and consistent service levels, which are critical for customer retention in an industry where brand loyalty is often low. The primary monitorable for this expansion will be how quickly the company achieves unit-level profitability in these new markets and whether its subscription-based income can offset the expenses associated with delivery subsidies and rapid merchant acquisition.