How Swiggy and Zomato are dealing with the slowdown in food delivery

The food delivery market in India, dominated by Zomato and Swiggy, is experiencing a slowdown. The rise of quick commerce and limited discretionary spending are among the reasons for the sluggish demand environment.

In such a situation, both companies are undertaking measures to address the tepid demand in food delivery.

Zomato

Food delivery stayed in the slow lane for Zomato in the March quarter. Parent Eternal reported a steep 78% year-on-year (YoY) fall in net profit to Rs 39 crore, as losses from its quick commerce arm Blinkit continued to burden the bottomline.

Food delivery, still Eternal’s largest business grew slowly and CEO Deepinder Goyal attributed this to weak discretionary spends and the rising influence of quick commerce on both operations and demand.

Zomato has taken multiple steps to address the slowdown:

No more quick: Eternal shut down its 15-minute food delivery service Quick and homely meals segment Everyday, as both services failed to muster enough demand. Current restaurant density and kitchen infrastructure are not conducive to 10-minute food delivery, which leads to inconsistent customer experience, Goyal said.Push for Bistro: The company will promote Blinkit’s Bistro, which competes with the likes of Zepto Cafe. The service, which operates via in-house kitchens, is being expanded across Delhi-NCR, Bengaluru, and Mumbai. Bistro now runs more than 100 kitchens in these markets.

Rain fee waiver ends: In a recent update, Zomato revealed a new ‘rain fee’ that will now apply even to its Gold subscription members. Previously exempt, these premium users will now face an extra charge for deliveries during inclement weather.

Swiggy’s strategy

In the March quarter, Swiggy saw its net loss almost double to Rs 1,081 crore, due to the aggressive expansion of its quick commerce network, which added nearly four dark stores per day.

The broader slowdown did not spare Swiggy, and saw its food delivery business grow 17.6% YoY in terms of GOV — the lower end of its 18-22% growth guidance. However, this was faster than Zomato’s 16% on-year growth in GOV in the same segment.

Here’s what Swiggy is doing:

Bolt expansion: Swiggy is focussing on its quick food delivery offering, Bolt, where it aggregates restaurants for 10-15-minute order fulfilment. It said that during the quarter, Bolt contributed 12% to the company’s overall food delivery volumes. It has expanded to 500 cities.

New products: Swiggy introduced a new feature called ‘Drops’, offering customers access to exclusive, limited-edition dishes created by some of the country’s leading chefs. This feature offers a dual benefit: For customers, it provides early access to experimental and innovative dishes; for Swiggy’s restaurant partners, it serves as a platform to test new offerings and cultivate deeper customer loyalty.

Swiggy also launched an exclusive discount programme for students, which allows them to subscribe to Swiggy One and One Lite programmes at a discounted rate.