The ride-hailing platform Rapido plans a foray into the food delivery business. The company is betting on its 4 million-strong, ready-to-deliver logistics fleet. However, the food delivery space in India has been tested by other similar models like Ola and Uber, and have failed. Elara Capital highlights the dynamics of the food delivery industry and elaborates on whether this can be a game-changer.

The Rapido’s fleet an advantage: Elara Capita 

Rapido’s 4 million riders’ fleet is primarily dedicated to bike-taxi services. Elara Capital’s report highlighted that due to the existing large rider base, Rapido’s expansion into food delivery comes with virtually zero capital expenditure. Furthermore, Rapido also has some experience in food delivery, as it has worked with ONDC to deliver food. With the increased order volume, the Rapido riders’ income will also see an increase. 

Swiggy and Zomato have a dedicated fleet of 0.53 million and 0.44 million riders. 

Different commission model

While Zomato and Swiggy charge anywhere from 16 to 30 percent in commission fees, Rapido is taking a different approach. It is partnering up with the restaurant. The restaurants say that the Swiggy and Zomato model forces them to inflate the menu prices. Rapido has asked the restaurants to keep their delivery and in-house menu prices the same. Rapido has proposed a fixed Rs 25 fee from restaurants for an order worth over Rs 100. 

For customers, a Reuters report says, Rapido is not charging any platform or packaging fee. However, it will be charging a delivery fee, but the details of it are yet to be revealed. Overall, Rapido’s commission model is flat at 8 to 15 percent, the Elara Capital report pointed out.

Scalability challenge 

The food delivery business in India is now over a decade old. In 2024, the size of the food delivery market in India was $9.5 billion, as per the Elara Capital report. From 2018 to 2023, the food delivery market grew 40 percent on a compounded basis. However, in the last year, the sector posted a 15-16 percent YoY growth. 

Swiggy and Zomato, the two biggest companies in the food delivery space, are now over a decade old. The two companies have struggled to make themselves the market leader over the years. Between FY20 – FY22, Zomato alone spent $400 million on advertisements and promotions. 

An increased cash burn for Rapido is imminent as it enters the food delivery business. The company has raised $559 million in total. In its last funding round, when it raised $24 million in December 2024, the company was valued at $1.1 billion. The company has so far incurred losses of Rs 371 crore in FY24 in its ride-hailing business. Although the company is looking to raise Rs 125 crore, scaling up the food delivery business simultaneously can still be challenging.

Consumer satisfaction 

The food delivery platforms are increasingly focusing on decreasing their food delivery time to below 30 minutes. Zomato and Swiggy have tried Bolt and Quick for superfast delivery. As the two food delivery giants are gearing up for even quicker delivery, the availability of Rapido’s riders, who will be working for two high-priority rider demand segments, will be challenging. The increased delivery time could compromise user satisfaction for Rapido, as the food delivery service time keeps getting shorter.