Ride-hailing unicorn Rapido is in advanced discussions with the National Restaurant Association of India (NRAI) to onboard restaurants for its foray into the food delivery space.NRAI, which represents over 500,000 restaurants across the country, has long been advocating for a viable “third-player” in a market currently dominated by Swiggy and Zomato, together accounting for a 95% share.
NRAI had, in January, actively explored onboarding member restaurants onto ONDC — the government-backed initiative aimed at unbundling digital commerce. While these efforts are ongoing, a viable business model hasn’t been arrived at yet.
According to Pranav M Rungta, vice president, NRAI, “We are still trying to figure out a business model where every part of the ecosystem on ONDC benefits, this includes incentives for buyer and seller onboarding apps, aggregators, customers, and our restaurant partners.”
“Meanwhile, discussions with Rapido have been going on for a while now. Two models have been presented, one which looks at reducing the existing commission burden from 35-45% to much lower, as well as a subscription-based model which eliminates commissions,” he added.
The zero-commission SaaS model mirrors Rapido’s successful switch to a subscription model in its autorickshaw and cab segments last year, which helped the company surpass $1 billion in gross merchandise value. Rapido, however, continues to charge commissions for its core bike-taxi business. “Larger restaurant chains could prefer a subscription model, as they don’t have an inherent need to promote discovery.
Smaller restaurants still stand to benefit from reduced commissions, but should also have to optimise on advertising spends. In both models, there are benefits,” Rungta added. Rapido has some prior experience with food delivery. It’s bike-taxi riders are engaged on idle-time to deliver food orders on Swiggy, which is also an investor in the company. It has a similar tie-up with ONDC, as well.
According to sources, Swiggy’s agreement with Rapido does not contain a clause which prevents it from entering food delivery. However, it does contain a clause where it cannot provide fleet services to Zomato. Rapido has also recently expanded its fleet engagement to q-commerce platforms Zepto, and Swiggy Instamart.
The development comes at a time of waning traction in ONDC’s food and beverage (f&b) category, which saw a 10 percent month-on-month drop to 14 lakh orders in February. NRAI has also opposed Swiggy and Zomato for launching q-commerce in food delivery through their own cloud kitchen brands, Snacc and Bistro, respectively, which it argues creates conflicts of interest on use of data.