Zomato’s renewed focus on its core business and Swiggy’s aggressive quick-commerce play are redefining the competitive landscape of the sector
Driven by a shift from aggressive expansion to consolidation, sustainability, and a renewed focus on core operations, India’s fast-evolving food delivery ecosystem is in the midst of a major transformation. While the 15-minute delivery segment recently witnessed a surge of new entrants, the pendulum appears to be shifting with major players taking a thoughtful approach regarding how ‘quick’ they really wish to be.
While Eternal (formerly Zomato) decided to pull the plug on its rapid food delivery business, Zomato Quick, citing profitability issues, Swiggy, another major player in the segment, has scaled its quick food delivery service, Bolt, making it operational in over 500 cities across India. While Zomato’s exit from its quick delivery pilot reflects a shift towards focusing on core operations, Swiggy’s moves indicate that they see long-term potential in hyperlocal delivery, especially as consumer expectations evolve towards instant gratification.
Zomato’s Focus On Core Operations
As experts point out that the future of the quick delivery ecosystem lies in optimising operations, improving worker conditions, and focusing on profitability over rapid expansion, Zomato’s exit from the rapid delivery indicates that the company is shifting its focus to core operations. This becomes significant when the experts point to high operational costs, inventory challenges, and delivery personnel shortages as key constraints.
Explaining that it was becoming difficult for the company to venture on the path to profitability without compromising on customer experience, Deepinder Goyal, the Chief Executive Officer (CEO) of Zomato, informed regarding the winding up of the pilot, which was introduced just months ago. The company is also shutting down ‘Everyday’, a pilot project that offered home-style meals at affordable prices.
“We are actually shutting down both these initiatives as we are not seeing the path to profitability in these without compromising on customer experience. The current restaurant density and kitchen infrastructure is not set up for delivering orders in 10 minutes, which leads to an inconsistent customer experience,”Goyal explained as the company filed its financial results for the recently concluded quarter.
Swiggy’s Trust In Long-term Potential
With Swiggy scaling its quick delivery service ‘Bolt’, which started in October 2024 and has surged across metros as well as tier two and three towns, the company believes that this service provides its growing base of restaurant partners a full-stack and scaled-up route to participate effectively in the quick-food delivery space.
While highlighting that over 45,000 restaurant brands (including quick service restaurant (QSR) chains) across over 500 cities are on Bolt today, the company stated that the service offers 47 lakh dishes spanning 26 diverse cuisines.
“Currently, over 12 per cent of our food delivery platform orders are through Bolt. We believe that this is both a market-growth and a market-share driver in the medium-term, since it not only delivers incremental orders for new use-cases but also drives higher salience of our platform for consumers,” the company’s management explained in an exchange filing.
One interesting aspect that the company revealed was that users acquired through Bolt have shown four to six per cent higher monthly retention than the platform average. Bolt has a slightly lower order value compared to the platform average, alongside a significantly lower last mile (due to service being capped at two kilometre), which lowers the delivery cost. Therefore, the margin structure of this offering is not dilutive to the platform.
Profitability In Quick Delivery Ecosystem
While emphasising that sustainability hinges on scale, infrastructure, and optimised last-mile logistics, the experts explained that the quick delivery model, though high on customer convenience, comes with operational challenges, especially in balancing speed with unit economics and inventory risks.
“Profitability in quick commerce remains elusive due to high logistics costs, low average order values, and intense competition. Zomato’s exit from its 10-minute delivery pilot underscores these challenges…While profitability is feasible in dense urban areas with optimised operations, the current labour shortages and rising costs make it a complex endeavour,” highlighted Ishan Tanna, Equity Research Analyst, Ashika Institutional Equity.
Addressing The Critical Gaps
Industry experts remarked that companies must focus on increasing order values, reducing operational burn, and leveraging technology for efficiency to move towards sustainable profitability. Critical attention is needed to improve worker compensation, provide benefits, and create a more sustainable gig economy model. Addressing these issues is essential for stabilising operations and ensuring long-term viability in the quick delivery sector.
“In essence, Zomato’s retreat and Swiggy’s doubling down illustrate two divergent strategies in a sector still searching for the right balance between speed, selection, and profitability. The space is likely to consolidate further, with players either specialising or integrating more deeply with their core platforms,” Bajaj Broking Research commented.
As the quick delivery segment becomes more mature and consolidated, the players focusing on their core platforms along with a strategic push to their rapid delivery verticals would be riding the growth trajectory going ahead. As Zomato reorients toward operational efficiency, Swiggy bets on hyperlocal delivery’s long-term value. While the profitability may still be more dependent on the urban pockets, a strategic push towards scale, infrastructure, and optimised last-mile logistics could change the dynamics.
