Swiggy and Zomato are focusing on affordable meals priced between ₹200 and ₹250 to turn food delivery into a daily habit. This shift aims to attract office-goers and budget-conscious users by minimizing mark-ups and delivery fees. Investors are tracking how these strategies impact platform margins in an increasingly competitive market.
India’s food delivery sector is undergoing a strategic shift as major players move to capture the high-frequency, budget-friendly meal market. Swiggy and Zomato are currently realigning their platforms to make the ₹200-250 price point more accessible for daily orders, aiming to move beyond weekend or occasional usage.
Evolving Strategies for Daily Demand
For food delivery platforms, the challenge lies in balancing affordability with the high costs of delivery and restaurant commissions. Industry data suggests that for customers to transition to daily ordering, the total bill must be low enough to compete with local dining options. Swiggy has been testing various formats, including its 'Value Store' and earlier experiments like the standalone 'Toing' app, to capture this price-sensitive segment. The company has previously faced hurdles in new ventures, having closed its 'Snacc' platform when it failed to reach necessary scale, highlighting the execution risks involved in launching new delivery models.
In contrast, Zomato has maintained a more unified approach. Rather than spinning off separate value-focused apps, the company focuses on utilizing its existing platform infrastructure. It uses targeted discounts and platform fees to manage demand in specific neighborhoods. While Zomato continues to develop new concepts like its 'Bistro' format, it remains cautious about fragmenting its user base with too many standalone applications.
Competition and Sector Dynamics
The market for online food delivery remains highly competitive with new business models emerging. Rapido-backed Ownly is trialing a model that moves away from traditional commission-based structures by allowing restaurants to set prices independently while charging a separate delivery fee. Meanwhile, large cloud kitchen players such as Rebel Foods are focusing on a multi-brand strategy, offering a range of price points from budget-friendly meals to premium coffee. This approach seeks to capture a larger share of the customer's wallet by addressing different dining occasions throughout the day.
Investor Monitorables
As these companies compete for market share in the budget segment, investors are looking at the long-term impact on profitability. While the online food delivery market in India is projected to reach approximately $27 billion by 2030, the ability to maintain healthy operating margins while offering aggressive discounts remains a key concern. The sector is characterized by high customer acquisition costs and the continuous need for investment in logistics. Key factors to track in upcoming quarters include the growth in average order frequency, the success of new low-cost delivery experiments, and the ability of these platforms to improve their margins as they scale in Tier-2 cities.