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.
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.