Rapido To Enter Food Delivery Business — All You Need to Know

Ride-hailing platform Rapido is set to foray into India’s competitive food delivery business. After receiving $30 million from Prosus, on top of a $200 million round led by WestBridge Capital, Rapido is looking forward to starting the venture by expanding in over 500 cities in 2025.

As per an Economic Times report, Rapido will charge restaurants a fixed delivery fee of ₹25 on orders below ₹400 and ₹50 on orders above ₹400. This equals to a commission in the range of 8–15%, against the 16–30% charged by incumbents Zomato and Swiggy.

However, history hasn’t been kind to food aggregating platforms as many players have either been wiped out or have found it difficult to sustain in this competitive business environment.

Is it a good move for Rapido?

As per ET, the National Restaurant Association of India (NRAI), representing over 500,000 restaurants across the country, has been in discussions with Rapido to explore a new, more sustainable model for the sector.

“We’ve been in discussion with Rapido over the last few months just the way we are working closely with ONDC,” said NRAI president Sagar Daryani. “We are discussing a structure which is economically and democratically much more viable for restaurants to sustain.”

Though Daryani declined to delve into specifics, it’s evident that restaurants are looking forward to escaping from the trap set by Zomato and Swiggy.

“Zomato is becoming unsustainable for small restaurant owners like us,” Vandit Malik, founder of The Garlic Bread, wrote on LinkedIn. “To even be visible on the platform, I’m forced to spend ₹30+ per order on ads. What’s left? Pennies. Sometimes, not even that.”

Another restaurant in the National Capital Region named Saffroma announced its decision to exit from Zomato , citing issues such as zero payouts and unauthorised ad spends.

Food delivery business over the years

In the past decade, several food delivery players went bust despite having strong financials.

Uber Eats came to India in 2017 backed by one of the world’s most recognisable brands, and failed to make a mark in this highly competitive environment. Equipped with a wide ride-hailing network and offering heavy discounts, it never captured more than 12% of the market, as per a CNBC-TV18 report. By 2020 it sold its entire India operations to Zomato for a reported $350 million.

Amazon also made its entry during the pandemic in 2020. However, despite its logistics strength and massive user base Amazon Food shut down by the end of 2022.

Foodpanda, which remained one of the early entrants, was acquired by Ola, which promised a $200 million investment to revitalise the platform. However, operational lapses, poor delivery performance, and partner disputes kept the business under pressure.

Breaking the Zomato-Swiggy duopoly

During Q1FY25 Zomato held 58% of the food delivery market, while Swiggy had a market share of 42%, a report by Motilal Oswal stated.

Zomato’s IPO in 2021 gave it ample funds to diversify into services like Blinkit. Both the delivery giants have benefitted from years of data, on user preferences, hyperlocal logistics, and delivery efficiencies, that new entrants can’t easily replicate.

Still, markets have resisted total monopolisation. Restaurants have come forward to protest against the big players. Government-aided efforts like ONDC aim to increase transparency and competition.