Rapido pilots food delivery in Bengaluru; analysts see limited impact

Business Standard

11-06-2025

As mobility platform Rapido begins piloting a food delivery service in Bengaluru, analysts expect limited disruption to India's entrenched food delivery giants.
According to a recent report by Bernstein, the market remains a tight duopoly, with Zomato holding approximately 54 per cent share and rival Swiggy at 46 per cent. While Swiggy has shown stronger year-on-year growth in gross order value (GOV), the US-based asset manager does not foresee Rapido's entry shifting the balance in the near term.
'We don't anticipate material market share impact from Rapido's entry,' said Rahul Malhotra, an analyst at Bernstein, noting that the service remains in its early pilot phase.
Rapido, which provides bike and taxi services, has announced plans to enter the food delivery business with a pilot launch in Bengaluru. The firm, which has raised about $600 million, plans to leverage its rider base (over 3 million) and charge lower take rates of 8–15 per cent. In comparison, Zomato and Swiggy take rates are higher at 18–20 per cent, according to the Bernstein report.
India's food delivery space has previously seen several entrants attempt to grow the restaurant base by offering lower take rates. These include Amazon, Ola, and ONDC. However, most failed to scale due to limited selection, poor customer experience, and operational complexity.
Food delivery remains a challenging business. Online food aggregators must negotiate take rates with approximately 300,000 restaurants. India's market is highly fragmented—only 10 per cent of GOV comes from QSRs (quick service restaurants), with the remainder from smaller restaurants—making scale difficult and favouring incumbents.
The Bernstein report noted that at low contribution margins, the flywheel effect fails. The average delivery cost per order is ₹50–60, so an 8–15 per cent take rate on a ₹400–500 order generates very low profitability, leaving little room for reinvestment or expansion into Tier 2 cities, where penetration is lower but growth potential higher.
Rapido could expand the restaurant pool (currently 300,000–400,000, with potential for over 1 million) by attracting lower AOV (average order value) restaurant outlets in Tier 2 and smaller markets. These outlets have not been viable for Zomato and Swiggy.
'We believe the ability to operate at low take rates will be difficult for Rapido,' said Malhotra in the report. 'Eventually, it will have to increase take rates to sustain.'
The report also noted that Rapido remains an unprofitable business. Notably, Swiggy is an investor and holds a 12–13 per cent stake in the company.
Bernstein continues to favour Zomato as its top pick, citing strong execution and growth in quick commerce. It also rated Swiggy as 'outperform', expecting the company to remain a key player in India's expanding convenience economy.
Swiggy's food delivery GMV grew 18 per cent year-on-year in Q4FY25, compared to 16 per cent for Zomato. Swiggy's GOV growth has trended higher on a year-on-year basis over the past two quarters. Management also saw good traction in the 10-minute delivery service Bolt, which is available in 500 cities and accounts for 12 per cent of total food delivery orders.
Zomato remains stronger on the supply side. Its average monthly restaurant partners stood at around 314,000 in Q4FY25, compared to 252,000 for Swiggy. Bernstein said Rapido would face difficulties negotiating with the over 500,000 restaurants currently associated with the two incumbents.
HSBC, in a recent note, said the unit economics of two-wheeler ride-hailing are on par with food delivery, but warned that customer experience, operational execution, and scaling remain formidable challenges. The bank added that while newer players may tap into lower-margin segments, they are unlikely to meaningfully disrupt the dominance of market leaders.
Separately, Kotak Institutional Equities reportedly said Rapido would need to invest aggressively in discounts and technology to gain a foothold in the food delivery business. With Zomato and Swiggy already deeply embedded in the restaurant and consumer networks, Kotak said the competitive threat posed by Rapido remains minimal. Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd