Big trouble for Deepinder Goyal and Sriharsha Majety as this company planning to enter food delivery market, the name is…, in talks with…

Rapido’s move into the food delivery space when the sector is facing problems of slower growth and ongoing disputes between restaurants and aggregators over commission rates.

Ride-hailing app Rapido is exploring opportunities to expand into the food delivery space, potentially disrupting the dominance of Zomato and Swiggy. According to an Economic Times report, Rapido’s senior executives have been engaging with restaurant owners to develop a competitive business model that challenges the existing commission structures imposed by the current market leaders.

While the company has yet to finalize these plans, it already provides delivery services for individual restaurants using its two-wheeler fleet. Rapido also delivers for Swiggy, which is an investor in the company, though the partnership does not include an exclusivity clause.

Rapido Expanding Horizons

Founded in 2015 as a bike-taxi platform, Rapido has emerged as the second-largest player in India’s ride-hailing sector. It is now looking to chart its next phase of growth, having crossed $1 billion in annualized gross merchandise value (GMV) from ride-hailing operations. The company currently operates in over 100 cities and plans to expand to 500 cities across India this year.

In February 2023, Rapido raised $30 million from Dutch investor Prosus as part of an extended funding round led by WestBridge Capital in 2022. The platform now fulfills 3.2–3.5 million rides daily, a significant increase from 2.6 million daily rides recorded in November.

While bike taxis remain the largest contributor to Rapido’s ride volumes, its auto-rickshaw and four-wheeler cab services are rapidly growing, due to its subscription model for gig workers and drivers. Unlike competitors Uber and Ola, Rapido allows drivers to pay a daily or weekly fee to access its platform instead of taking commissions per ride, this model has been well-received by stakeholders.

Rapido’s Financial Progress

Rapido has made strides in improving its financial metrics. The company reduced its net loss to Rs 17 crore in the September quarter of FY24, down from  Rs 74 crore a year earlier. Its operating revenue also grew by 46% year-on-year to reach  Rs 648 crore in FY24.

Zomato’s founder and CEO, Deepinder Goyal, recently acknowledged systemic challenges in the food delivery segment, which have affected growth. Zomato currently holds a 57.1% market share, according to brokerage firm Bernstein.

In addition to Zomato and Swiggy, new players such as Zepto, Zomato-owned Blinkit, and Accel-backed Swish have entered the market, focusing on quick commerce and hyperlocal deliveries.

Potential Disruption By Rapido

Restaurant owners, represented by the National Restaurants Association of India (NRAI), have been calling for a third player to challenge the existing duopoly. Rapido’s entry could bring this competition to Zomato and Swiggy, like other large economies which have three or four players in the food delivery sector.