Shares of Eternal, Swiggy drop as Rapido undercuts food delivery commission
Zomato
parent
Eternal
and its rival
Swiggy
dropped as much as 2.5% and 4% on Monday following an
ET report
that
Rapido
is planning to launch its
food delivery
services this month by charging significantly lower commissions to restaurants than the two large players.
Eternal shares closed 1.9% lower on the BSE at Rs 256.99 per share, after hitting an intraday low of Rs 255.35.
Swiggy
ended the day's trade 2.8% lower at Rs 364 a share, falling to Rs 360.10 apiece earlier in the day. The benchmark Sensex closed 0.31% higher at 82,445.21.
According to the agreed-upon terms with the industry body National Restaurants Association of India (NRAI), Rapido will charge a flat commission of Rs 25 for all orders below Rs 400 and Rs 50 for orders worth more than Rs 400. This translates to 8–15% commission from restaurants, compared to 16–30% that
Zomato
and Swiggy charge, as ET reported.
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Rapido's food delivery launch comes at a time when restaurants have been increasingly flagging issues of 'steep charges' levied by Zomato and Swiggy. "Zomato is becoming unsustainable for small restaurant owners like us," Vandit Malik, founder of The Garlic Bread, wrote on LinkedIn three weeks back. "To even be visible on the platform, I'm forced to spend Rs 30+ per order on ads. What's left? Pennies. Sometimes, not even that," he alleged.
The owners of another NCR-based small restaurant, Saffroma, wrote on X last week, which went viral, that it was quitting Zomato, alleging "zero payouts, mystery service charges and advertisements initiated without approval." The post has since been deleted.
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India's online food delivery market is expected to more than double to $15 billion by March 2029, according to a
December 18 report by JM Financial
. Platforms had penetrated only about 11% of the country's total food consumption in 2023, compared with 40% in China and 58% in the US, it said.
In a note dated June 2, brokerage firm Morgan Stanley said that online food delivery penetration in India is still in the early stages at around 14% against the 19-21% range for markets such as the US and China, "implying a long runway for growth'.
It kept its target price for Eternal's stock at Rs 320 per share, implying a potential upside of 24.5% from the stock's current price. Initiating coverage on Swiggy earlier this month, the brokerage firm pegged its target price for the stock at Rs 405 per share, marking a potential upside of 11.3%.
Swiggy's food marketplace CEO Rohit Kapoor,
in an interview with ET
this month, said that there was a need for a greater level of dialogue between restaurants and aggregators over issues such as platform commissions, but pointed out that the architecture of economics has changed over time. Swiggy is an investor in Rapido.
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