The Indian food industry is one of the fastest-growing industries in the country. The sector is expected to show a growth of 11%-15% from FY2022 to FY2026, driven by rising income levels, changing lifestyles, and increasing urbanization according to maximizemarketresearch.com.
So in a scenario like this Zomato and Swiggy offer a solution by being the bridge between the needs of the consumer and offering scalability/distribution to manufacturers (restaurants).
As we all understand, the gross margins are very high (around 65%-75%) in the food business, but the fixed overhead cost for the restaurant owners also remains heavy. Therefore, for every incremental revenue if the restaurant has to share a certain percentage (15%-25%) with the distribution partner like Zomato and Swiggy it is still a very high margin/contribution on costing. And from consumers’ perspective access to variety, ease of ordering and delivery are great value propositions for a minimal cost compared to the time & logistics costs and hassle that the consumer will encounter.
Zomato and Swiggy will never profits. Thats the truth. Just accept it. The minute they increase their commissions and fees - orders will decrease and restaurants will leave the platform. At the current stage also its not making any restaurants any money. All are dependent on dine-in. Food when prepared in bulk and sold in bulk will only make profits.
You are right. A few years back Zomato co-founder wrote an email to restaurant partners stating he will not step into food delivery business despite pressure from investors. He knew it will never make profit. Anyone who has never been in food business may not readily understand this
The Indian food industry is one of the fastest-growing industries in the country. The sector is expected to show a growth of 11%-15% from FY2022 to FY2026, driven by rising income levels, changing lifestyles, and increasing urbanization according to maximizemarketresearch.com.
So in a scenario like this Zomato and Swiggy offer a solution by being the bridge between the needs of the consumer and offering scalability/distribution to manufacturers (restaurants).
As we all understand, the gross margins are very high (around 65%-75%) in the food business, but the fixed overhead cost for the restaurant owners also remains heavy. Therefore, for every incremental revenue if the restaurant has to share a certain percentage (15%-25%) with the distribution partner like Zomato and Swiggy it is still a very high margin/contribution on costing. And from consumers’ perspective access to variety, ease of ordering and delivery are great value propositions for a minimal cost compared to the time & logistics costs and hassle that the consumer will encounter.
Zomato and Swiggy will never profits. Thats the truth. Just accept it. The minute they increase their commissions and fees - orders will decrease and restaurants will leave the platform. At the current stage also its not making any restaurants any money. All are dependent on dine-in. Food when prepared in bulk and sold in bulk will only make profits.
You are right. A few years back Zomato co-founder wrote an email to restaurant partners stating he will not step into food delivery business despite pressure from investors. He knew it will never make profit. Anyone who has never been in food business may not readily understand this
Time is a great reality checker.