A report by Elara Capital notes that Rapido must resolve tech issues and expand restaurant options to justify its ongoing cash burn
While Rapido has entered into a direct competition with likes of Swiggy and Zomato with its food delivery app Ownly, making a dent in the near term could take time as the model is in its early days of evolution. A report has flagged teething issues such as OTP delays, occasional location-related glitches, and a less seamless post-login experience, especially for android devices.
A report by Elara Capital highlighted that restaurant coverage is limited, with large quick service restaurant (QSR) chains yet to be integrated. This necessitates faster execution, so as to tap a wider consumer choice versus incumbents. On the pricing front, Ownly’s positioning is transparent and the app is charging only item value plus 5 per cent tax at present.
“While Rapido is enhancing the technology backbone of Ownly, our ordering experience suggests that a few areas need improvement, particularly on Android devices. The bottlenecks include minor delays in login OTPs, occasional issues with location search, and ensuring a seamless home screen post-login,” the report emphasised.
For QSR chains, Swiggy and Zomato’s median realised prices tend to be lower due to platform-driven promotional offers, which Ownly currently does not replicate given its limited scale. However, for standalone restaurants, Ownly’s pricing advantage is evident with final bill for customers around 28 per cent lower than that on Swiggy and Zomato, even after factoring in delivery fee waivers under membership plan.
Monitoring Execution And Evolution
The report noted that Ownly has onboarded 5 to 6 per cent of restaurants in operating area in Bengaluru. While subscription model could be welcomed by restaurants, the earnings trajectory of delivery partners warrants a watch, in light of static delivery fees, rising compliances, unlike Swiggy and Zomato, wherein consumers pay delivery costs.
“Rapido must resolve tech issues and expand restaurant options to justify its ongoing cash burn. Its ONDC success in ride-hailing signals execution potential for Ownly in food delivery. At an estimated Rs 100 cash burn per order, a 5 per cent market share in pan India delivery implies around Rs 8 billion annual burn, which may rise by 50 per cent upon persistent lower scale and cost pressures,” the report pointed out.
The report mentioned that given a muted start and tech gaps, emerging as a meaningful challenger in food delivery will be a long haul.
