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August 18, 2025
Hiral Goyal, The Morning Context
18 August 2025
A trend that has been playing out through big and small changes over the last two decades is that in urban India the kirana store is easily replaceable.
When it comes to buying groceries, urban Indians have a number of options. They can visit a fancy supermarket run by a conglomerate or order online through a number of e-commerce and instant-delivery companies. And if the above doesn’t seem easy enough, they can hop over to a nearby mom-and-pop store.
It would appear it is now the turn of smaller towns in the country to witness the kirana disruption. Even though 99% of grocery shopping in these tier-3 cities is done through neighborhood general stores, there are startups that believe this is an outdated and inefficient form of retail and a change is in order.
One such company is SuperK. The startup’s mission is to build a grocery store model in small towns that has all of the advantages of modern retail packed in a compact 800-square-foot store. This is what Anil Thontepu and Neeraj Menta had set out to do when they founded the company in 2019. The idea was to bring a modern trade-like grocery shopping experience to small-town India a wide assortment of products at a better value.
“There is a cost-efficient world of general trade and a customer-loving world of modern retail,” says Thontepu. “We wanted to see if we can bridge this gap…and do something for the small-town people by bringing the best of both these worlds.”
Over the past five years, the Bengaluru-headquartered startup has opened over 130 stores across 80 towns in Andhra Pradesh. And it doesn’t want to stop there. The company wants to expand to another 300 towns in Andhra Pradesh and nearby states of Karnataka and Telangana over the next 24, months. That’s quite an ambitious target. But the founders believe the market size for Superk is so large that they should be able to build a Rs 2,000-3,000 стоore ($228-342 million) annual business from Andhra and Telangana alone.
To fuel this expansion, Superk raised Rs 100 crore ($11.7 million) in Series B funding last month. The round, led by Binny Bansal’s 3STATE Ventures and CaratLane founder Mithun Sacheti, valued Superk at 2-2.5x its previous valuation of Rs 160 crore (about $18.25 million) in 202/
Now, Superk is not entirely unique. It competes with startups like Frendy, Apna Mart and Wheelocity, which are also trying to organize the retail market in India’s smaller towns. What sets SuperK apart is its larger, bolder approach. Grocery chain Apna Mart, for instance, runs franchisee stores in tier-2 or tier-3 markets and also offers 15-minute home delivery, SuperK’s focus is only on supermarkets. Frendy operates mini-marts and micro-kiranas in villages and towns with fewer than 10,000 people, but SuperK targets small towns with populations between 20,000 and 500,000. And Wheelocity supplies only fresh produce to rural areas, while Superk sells dry groceries as well as packaged consumer goods.
This rather radical shift in focus-away from tier-1 and tier-2 cities-ties in with India’s changing consumption pattern. “Consumer mindsets are changing even in smaller cities,” says Devangshu Dutta, founder and chief executive of Third Eyesight, adding that these consumers are beginning to favour more modern retail environments. And NielsenIQ’s latest report says rural markets in India grew twice as fast as cities between April and June 2025.
In this landscape, SuperK fits like a glove, with its franchise-first approach. Thanks to an asset-light model, the company has the agility to go deeper into smaller towns.
But it won’t be all that easy either. As Dutta says, “Changing grocery habits is a long, capital-intensive game.” Moreover, big retail chains are also jumping on the bandwagon. Hypermarket chain Vishal Mega Mart, for instance, already operates 47% of its stores in tier-3 cities and plans to expand into cities with populations exceeding 50,000. Supermarket chain operator DMart is also focusing on tier-2 and tier-3 cities.
However, Superk founders believe they are prepared for the challenge. Menta says the startup has arrived at a business model that is scalable, sustainable and, more importantly, offers value to its customers.
It’s too early to say whether they will be successful in this endeavour. That said, SuperK appears to have built a smart retail business for small-town India.
Refining small-town retail
SuperK’s founders have drawn inspiration from domestic and international retail chains like DMart and Costco. But they haven’t duplicated their strategies and made their own tweaks instead. For instance, large retail chains usually run company-owned and company operated, or COCO, stores. Though this approach is more cost-intensive than the franchise model, it allows a company to ensure a uniform customer experience across all outlets:
Superk doesn’t do that. It runs only franchise-owned and franchise-operated (FOFO) stores, which are no bigger than 800 sq ft. The company is not the first to have experimented with this model, but Thontepu believes that everyone else before them “did not try with the right spirit”. A franchise-owned store, argues co-founder Menta, is run differently from a company-owned store one has to keep in mind the store owner’s incentives, needs and concerns.
Under the franchise model, entrepreneurs invest between Rs 12 lakh (about $13,690) and Rs 15 lakh (about $17,110) to set up a Superk store. Of this, Rs 4 lakh (nearly $4,560) is spent on the store fit-out and infrastructure, the rest goes towards buying inventory. These stores, according to Menta, typically achieve a breakeven point after six months. On average, a retail store takes longer than that-12-15 months to reach breakeven.
Superk fills the shelves by procuring its inventory directly from brands as well as distributors. “The inventory is recommended by us through a mobile application. Store owners have an option to make certain changes within the limits that we have set for them,” says Thontepu. Revenue is shared and the model is similar to the one followed by nearly all retailers in India. Franchisees earn varying levels of margins on different kinds of products, depending on how easy or tough it is to sell those items. For instance, staples like dal and rice have lower margins, while confectionary items and products that need greater effort to sell enjoy higher margins of up to 20%.
In addition to this, there’s a private label business, especially loose items like pulses. In fact, private labelling is part of the company’s efforts to bring some standardization in India’s unorganized retail market. “A customer coming to our store should be able to blindly expect consistent quality on the product they’re buying,” says Menta. “We have organized our sourcing, processing, cleaning, packaging, testing. Everything that a brand would do to provide a great-quality product to their customer.”
Unlike distributors or other retailers who operate franchise models though, Superk claims that it does not dump its inventory on store owners. Menta says the franchise structure is designed in a way that Superk does not benefit from selling unnecessary stock to store owners. “If I lose, he will lose. If he loses, I lose. That is the way (the structure) is created. We, in fact, recommend owners to remove some products if they are not selling.” says Menta.
On the customer side of things, Superk’s value proposition comes down to offering the best prices. More than a year ago, for instance, it introduced a membership programme that offers customers cashback that is redeemable on their future purchases. “If they pay Rs 300 [approximately $3.5) for a six-month membership, they get 10% cashback on all purchases that they are making up to Rs 300 every month,” explains Thontepu. He says 35-40% of Superk’s more than 500,000 customers are enrolled in this programme.
All of this sounds good even promising in theory. But will it be enough to build a sustainable and scalable retail business?
A long, hard look
Let’s first look at what really works in SuperK’s favour.
One, the focus on selling staples under a private label brand. This has been done successfully before. One example is Nilgiri’s, one of India’s oldest supermarket chains.
Founded in 1905, Niligiri’s operated under a franchise model and sold dairy, baked goods, chocolates and other items produced under its own brand. The supermarket chain was sold by debt-ridden Future Group for Rs 67 crore ($7.65 million) in 2023, less than one-third the price the latter paid to acquire the company from private equity firm Actis in 2014. However, its history is worth learning from.
Shomik Mukherjee, a Delhi-based consumer goods advisor who was a partner at Actis while the firm was in control of Nilgiri’s, recalls the value proposition created by Nilgiri’s private label products. “In the case of private labels, it is essential for a company to have a reason why people will walk into that store. For Nilgiri’s, it was bakery and dairy products,” says Mukherjee. Owning a private label that brought in customers also ensured that franchisee owners had incentives to continue working with Nilgiri’s. “It is about giving the franchisees a safe portfolio of private label goods that are desired by customer instead of something that is shoved down the franchisees’ throat to derive margin,” he says.
You see, the overall grocery business operates on a very low margin. But private labelling, says Satish Meena, founder of Datum Intelligence, offers the highest margins – 35-40% – in the grocery business, after fresh produce, making it a lucrative business to get into.
Superk, which sells essential items through its private label, has the opportunity to earn better margins in grocery retail. More importantly, private labelling holds the potential to become SuperK’s identity and boost customer retention and loyalty.
Two, SuperK’s franchise model allows it to expand to more locations rapidly as compared to a regular modern trade chain with company-owned stores, says Mukherjee. This model makes SuperK’s business asset-light and brings down the cost of running a network of stores. “Under this model, the franchisor does not incur the upfront cost of opening a store or having to deal with the trouble of hiring and replacing store managers,” he adds. Since most store owners in a franchise model are landowners, there is a greater stability in operations as well, he explains. Moreover, Superk stores are quite small (800 sq ft), allowing easier availability of property.
The franchise model, however, is not entirely foolproof. One of the inherent problems is the difficulty in implementing standard operating procedures (SOPs) across all stores. And the problem only worsens as the company expands operations to different cities. While Superk stores boast a no-frills fit-out that can be easily set up anywhere, how these stores are maintained through the wear and tear over the years is yet to be seen.
A bigger fear is that the store owner may start running their own store without the Superk branding. “If Superk loses the franchisee owner, it also loses the location in which the store was operating,” says Mukherjee.
Moreover, most franchisee owners in the retail business typically tend to be experienced general store owners who might not be willing to adopt new technology. “Since they have run a store before, they think they know how and what to order for inventory and may not follow SuperK’s tech-enabled recommendations,” says Mukherjee.
There’s another problem. While the founders claim to have seen considerable success (35-40% sign-ups) in the rollout of SuperK’s membership programme for customers, Third Eyesight’s Dutta raises concerns about its future growth. “Indian consumers’ price sensitivity limits membership fee potential,” he says. According to him, the programme’s value in the tier-3 market lies more in customer acquisition and retention than direct revenue generation. “Long-term success requires a cashback programme to drive purchase frequency and basket size increases to offset the costs,” says Dutta.
Menta, however, has a different view. He says SuperK’s subscription is designed in a way that benefits customers only when they make full basket purchases. Moreover, the company has different pricing slabs for membership depending on the various basket sizes, which makes the model more viable. Considering the programme is a little more than a year old, it is still too early to judge whether it will find a lot of takers in small towns.
For now, the founders are in no hurry to expand their business across India. “There is no reason to go into five states. Then, you are spread thin and your economics will not work out. It’s a business of managing operations at a very low cost,” says Menta. The plan is to stick to one region and continue to go deeper into it. “A lot of our competitors who started five years ago spread to so many places that it became very difficult for them to manage,” he adds.
This is also the crux of how Thontepu and Menta are building SuperK. By implementing what they have learnt not only from their own experiments, but also from the failures and successes of other businesses. While there’s no guarantee that Superk will become a roaring success, it does appear to have set an example by starting small and growing patiently. And if the latest funding is any proof, investors are interested.
(With inputs from Neethi Lisa Rojan)
(Published in The Morning Context)
admin
August 5, 2025
Aakriti Bansal, Medianama
August 5, 2025
MediaNama’s Take: Swiggy is shifting from individual convenience to workplace capture. With DeskEats and Corporate Rewards, the company is embedding itself directly into the workday. This move is not just about food delivery. It is about becoming part of employees’ daily routines. More repetition leads to more orders, stronger retention, and access to a new layer of user behaviour: professional identity.
This approach draws from older models like office canteens and Sodexo meal cards. However, Swiggy reworks it for the app economy. Instead of fixed menus or closed ecosystems, it offers personalized choices tied to employer-subsidised benefits. That creates stickiness. When a company supports one app and offers discounts, switching becomes less likely.
The key question now is whether this integration creates lasting value or opens up new responsibilities. These include questions around consent, profiling, and where to draw the line between workplace systems and digital platforms.
What’s the News
Swiggy rolled out DeskEats, a curated food delivery collection for working professionals, in 30 cities and over 7,000 corporate hubs, according to Storyboard18. MediaNama also reviewed the feature on the Swiggy app. The collection includes categories like Stress Munchies, Healthy Nibbles, One-Handed Grabbies, and Deadline Desserts, aimed at common workday cravings.
During the pilot, DeskEats reached 14,000 companies and 1.5 lakh employees. Users can find it in the app by typing “Office” or “Work.”
Swiggy also launched Corporate Rewards, which lets users access benefits by verifying their work email. These include flat Rs 225 off food orders, Rs 2,000 off on Dineout, and Rs 100 off on Instamart.
On LinkedIn, Swiggy VP Deepak Maloo described Corporate Rewards as the professional version of its earlier Student Rewards program which offers perks like free deliveries, flat Rs 200 discounts, and deals starting at Rs 49, tailored for students aged 18–25 across India.
Financial Context
Swiggy may have launched DeskEats while under pressure to control its burn. In Q1 FY26, it spent Rs 1,036 crore on ads—a 132% jump and posted a loss of Rs 1,197 crore. DeskEats and Corporate Rewards offer a way to stabilise repeat orders without over-relying on discounts or ad spending.
The company’s adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) loss widened to Rs 813 crore. Overall, food delivery revenue grew by 20.2% year-over-year to Rs 2,080 crore, with order volume growing by 23.3%. At the same time, newer formats like ultrafast Bolt and SNACC are aimed at increasing consumption frequency and improving retention. These efforts signal Swiggy’s larger bet on everyday integration to drive value.
Platform Strategy and Corporate Integration
DeskEats gives Swiggy access to dense, time-sensitive demand during work hours. Devangshu Dutta, founder of Third Eyesight, says this helps streamline operations: “By integrating directly with workplaces, Swiggy can anchor itself in employees’ daily routines and provide a more predictable stream of orders.”
He adds, “Scheduled office meals create habitual consumption patterns and increase customer lifetime value, especially when the employer endorses a single platform and offers a favourable price-value mix.”
“This is the age-old model followed by contracted office canteens or cafeterias as well, but updated to the mobile app era, with more flexibility in terms of the items that an individual can order based on their own preferences”, Dutta added.
Furthermore Dutta opined, “Adoption is likely to be more in the larger cities where there is a greater concentration of demand and out-of-home consumption is higher among migrant professionals with high discretionary spending power.”
Data, Consent, and Workplace Targeting
To access Corporate Rewards, users verify with their work email. Swiggy hasn’t said whether it collects additional employee data or whether employers see usage metrics. It’s also unclear if enrolment is opt-in or automatic.
This concern mirrors recent questions raised about Zepto, which began recommending mood-specific product bundles like “Crampy” or “Ragey” based on user searches for PMS. Critics pointed out that such inferences may not be accurate and are often made without the user’s explicit awareness. Zepto’s privacy policy permits broad data collection, including health and behavioural patterns, but lacks clear disclosure on profiling. While Swiggy may not be doing this visibly, the direction of workplace-linked behaviour data raises similar concerns under India’s Digital Personal Data Protection Act (DPDPA), which still doesn’t regulate inferred or behavioural data clearly.
As this model scales, it raises questions under India’s DPDPA especially around purpose limitation and workplace-based profiling.
Why This Matters
Swiggy’s push into the workplace mirrors a broader shift across the food delivery market. Zomato recently launched ‘Zomato for Enterprise,’ a corporate food expense management platform that allows employees to charge business orders directly to their companies. With features like budgeting, ordering rules, and account toggling between work and personal use, Zomato is positioning itself as a paperless, digital alternative to legacy players like Sodexo. According to CEO Deepinder Goyal, over 100 companies have already onboarded the platform.
This move signals intensifying competition in the enterprise food space. While Zomato focuses on billing and reimbursements through employer-tied accounts, Swiggy is targeting recurring workplace consumption through curated menus and behavioural nudges. Both platforms appear to be building business-facing verticals that go beyond consumer ordering, aiming to lock in institutional clients and expand platform dependency within the workspace.
Unanswered Questions
MediaNama reached out to Swiggy with the following questions. The article will be updated when we receive a response:
Is Swiggy positioning DeskEats and Corporate Rewards as part of a larger shift into corporate benefits?
How do companies sign up for Corporate Rewards? Are there different plans or models based on company size?
What employee data does Swiggy collect when someone signs up using their work email?
Are DeskEats and Corporate Rewards linked to Swiggy One or any other paid subscription?
How many companies and users are currently active on DeskEats?
Does Swiggy plan to scale this into a standalone B2B vertical?(Published in Medianama)
admin
June 5, 2025
Aakriti Bansal, MediaNama
June 5, 2025
A restaurant owner recently took to X (formerly Twitter) to publicly slam Zomato for “mystery charges” and unauthorised ad placements, reigniting concerns over how the platform treats its small business partners. The tweet, accompanied by screenshots of the restaurant’s earnings dashboard, claimed that despite months of listings, his restaurant received zero payouts, and Zomato allegedly ran ads without his consent.
“Dear @zomato @deepigoyal I’m finally pulling my restaurant off your platform. Congrats! Your mystery service charges, surprise ad placements (without consent), and a POC who ghosts like it’s a talent show—truly inspiring. Small outlets deserve better,” restaurant owner Manish posted on X, under the username @maniyakiduniya.Zomato responded: “We hear you! As mentioned earlier, please share your restaurant ID with us via DM, so that our team can get in touch with you.”
The post has struck a chord among restaurant owners who say Zomato’s ad model bleeds their business dry. In conversations with MediaNama over the week, two restaurant owners and a former manager with Zomato independently confirmed that the platform’s advertising system leaves little room for transparency, choice, or sustainable profit.
The names of the restaurant owners and the former Zomato manager have been withheld to protect their anonymity.
Forced Ad Spending and Diminishing Returns
Restaurant owners say visibility on Zomato is tightly tied to how much they spend on advertising.
“If you don’t run ads, your restaurant won’t even show up unless someone searches for you by name,” one owner told MediaNama. He further added, “From what I’ve seen, the top 10 restaurants you see when you open Zomato are all paying for that spot.”Even ratings and reviews don’t help. For instance, if a user searches for ‘noodles’, only those who have paid for the ad category will show up in the list.
Restaurant owners explained how the ad budget starts small, around Rs. 300–400 per week, but grows rapidly. In one case, as seen by MediaNama in a restaurant’s ad dashboard, spending jumped from Rs. 9,000 to Rs. 15,000 per week in just two to three weeks.
“Some are spending Rs. 18,000 to Rs. 20,000 weekly now on ads just to stay afloat,” an owner explained, noting that these costs are hard to bear for restaurants with weekly sales as low as Rs. 2,500.
“When everyone is pushed to advertise just to stay visible, it raises serious questions about how fair the competition is on the platform,” they said. “It’s not about food quality or ratings anymore, it’s about who pays more,” they added.
A screenshot shared by a restaurant owner showing a decline in sales from ads, offers, and orders with applied discounts, highlighting concerns over the effectiveness of Zomato’s advertising model.
Click Charges with No Sales
Zomato charges restaurants based on clicks, not conversions. This means a restaurant is charged whenever a user taps on its listing after seeing a sponsored ad, regardless of whether the user places an order.
One owner explained, “A single click can cost around Rs. 6. Even if a customer just views the restaurant by clicking on it and doesn’t buy, that money is deducted.” He showed a dashboard with 4,877 clicks – most of which occurred before noon – but no conversions. “They exhaust our daily limit by 12 PM and then tell us to increase ad budgets,” he added.
Another restaurant owner echoed similar concerns in a Reddit conversation reviewed by MediaNama. The owner stated that Zomato counts a ‘visit’ even when a user scrolls past an ad and places an order a day later. “That is on purpose,” he wrote, calling the model “scammy for sure”. He also confirmed that restaurants receive no detailed data on who placed orders via ads versus organically.
Furthermore, the owner noted that Zomato lacks a clear grievance redressal mechanism for ad-related issues, as complaints are often ignored by a restaurant owner’s point of contact.
“There’s no formal audit or independent review if an ad campaign fails,” he said.The Legal Escape Hatch: You Signed the Contract
Restaurant owners say Zomato deducts ad spends automatically, citing terms buried in the onboarding agreement – terms many admit they didn’t fully understand before signing. Once enrolled, there’s no clear way to pause or cancel.
“There’s no way to opt out once it starts, and no refunds either,” one merchant said. “Zomato just says, ‘You came to us,’ whenever we raise concerns,” he added.
But is this consent truly informed? “It’s a honeytrap,” the merchant said. “There’s no other option but to keep spending on ads if you want to stay relevant on the platform,” he explained.
Price Parity, Platform Pressure, and Squeezed Margins
Another major source of concern is Zomato’s price parity push. According to one owner, the company convinced restaurants to upload their table-rate menu on the platform by offering to lower commission fees. However, this strategy has backfired for many.
“They promised lower commission if we maintained the same prices online and offline. But now we pay Good and Services Tax (GST), high commissions, and ad spends on top of that. Our margins are cut down to 5–10%,” he said. Commissions alone can go up to 35–40% every month, forcing smaller restaurants to comply just to remain competitive.
In effect, merchants are footing the bill for everything: discounts, ads, visibility, and commissions, while Zomato gains from each layer.
Coupons and Data Obscurity
The dashboard Zomato offers shows data like clicks and visits, but it hides key financial insights that would help merchants make informed decisions. “They will show you how much you sold, but not how much you are paying to the platform,” one owner said.
Restaurant owners also said they have little to no control over how Zomato spends their ad budget. “We don’t know when our ads are shown, or to whom. There’s no data on which campaign worked better, or what to change,” one merchant said. Without visibility into targeting and performance strategy, many feel they are blindly spending in hopes of visibility.
Coupon codes, too, are deducted from the restaurant’s share, even if the platform offers them without informing the merchant. “Whatever discount a customer sees, it’s cut from our side. Zomato’s share is tiny, about 15%. We bear the rest,” the merchant added.
If a platform issues discounts unilaterally but bills restaurants for them, is that a fair bargain?
Opaque Categories and Manipulated Targeting
Merchants also highlighted how Zomato divides ad rates by cuisine categories — North Indian, Chinese, etc. — and even by customer frequency. “There are eight to 10 customer categories, each with a different ad rate,” an owner said. “Frequent buyers are more expensive to target”, he added.
The platform nudges merchants to buy targeted ads by showing graphics and dashboards that suggest potential boosts. But when profits drop, and merchants reach out, they are told that competition has increased significantly since they last got in touch with Zomato and they should spend more.
“It’s a vicious cycle. They’ll say: ‘Try a brand title ad or pay Rs. 300 extra to reach daily customers.’ The game never ends,” revealed the restaurant owner.Inside Zomato: How Ads Shape Visibility
A former Zomato manager told MediaNama that restaurants not running ads don’t get deliberately penalised, but they do end up losing visibility. “Those who run ads automatically rise in rankings. So the others fall behind,” he said. Even a high-rated restaurant may slip if competitors outspend it.
For context, how much a restaurant pays for ads often depends on their rapport with the specific Zomato account manager and their business goals. “If a restaurant wants aggressive growth, we push it to the top line: high spend, high return. Others stay in the down line: lower investment, slower scale,” he said.
Ad pricing, he said, is not standardised. “It varies depending on what the manager thinks the client can afford and how much they are willing to push.”
He added that Zomato’s discovery algorithm changes every five to six months, which makes it difficult for restaurants to adapt or plan long-term. “The idea is to keep the system rotating so one client doesn’t dominate.”
Performance tracking for restaurants, he said, is mostly transparent except for one missing piece: acquisition data. “Zomato doesn’t show how many customers came through advertising. That’s where it becomes murky.”
He admitted Zomato doesn’t intervene if a restaurant complains about bad ad results. “It depends on the manager’s willingness but hardly anyone did it because of too many internal disputes on this issue.”
Why Ad Revenue Matters So Much
Ad revenue, the former Zomato manager said, is especially crucial in Tier 2 and Tier 3 cities.
“In big cities, order values are high, so aggregators can survive on commissions. But in smaller cities, ad income is the main driver as the order values are comparatively low”, the former manager added.Zomato’s Q4FY25 Shareholders’ Letter reflects this reliance: the company’s advertising and sales promotion expenses rose to Rs. 1,972 crore on a consolidated basis in FY25, up from Rs. 1,432 crore in FY24. While these are expenses borne by the platform, they highlight how advertising has become a structural lever in both customer acquisition and revenue generation.
Elsewhere, an HDFC Securities report states that quick commerce companies have theoretical levers to improve margins, such as increasing take rates, including higher ad income. It also observes that Blinkit would need to improve its take rates from 18.5% to 22% to reach a 5% adjusted EBITDAM (Earnings before Interest, Taxes, Depreciation, Amortisation, and Management Fees), with ad revenue identified as a key lever to meet that target.
However, the report notes that heightened competition may keep some of these levers non-operational.
Zomato‘s Response
In response to MediaNama’s queries, a Zomato spokesperson shared the following statement:
“All marketing collaborations such as ads, promotions, and discounts etc., as well as commercials, are mutually discussed with our restaurant partners before being switched on, switched off or modified. Our multi-factor authentication system ensures that partners retain full control and give explicit consent which is registered before any changes go live. We also maintain robust escalation mechanisms, allowing partners to raise concerns and receive prompt, satisfactory resolutions through the Restaurant Partner App as well as centralised helpline numbers.
We continue to see restaurants having confidence in our partnership and are taking a proactive step to improve and enhance our interactions and processes. For our smaller restaurant partners, we work extra hard to make it easier for them to grow with us. There are always opportunities to improve and we are committed to working on them, on-time.”
While Zomato says it maintains robust escalation mechanisms and explicit partner consent, restaurant owners who spoke to MediaNama described a different reality: one of automatic deductions, limited control, and opaque ad operations.
What Zomato’s Policy Says and Doesn’t
According to Zomato’s Sponsored Listing Service terms, merchants are expected to make full payments in advance. Refunds are not guaranteed, and Zomato has full discretion on ad placements, sizes, and category changes.
The company “assumes no liability or responsibility for any… click frauds, technological issues or other potentially invalid activity that affects the cost of Service.” It also “does not warrant the results from use of Service, and the Merchant assumes all risk and responsibility.”
The Sponsored Listing Service terms grant Zomato broad rights to use merchant content, brand names, and logos, while limiting the company’s liability to the amount of fee paid during a term. These terms become legally binding once the Service Request Form (SRF) is signed.
While Zomato offers a merchant dashboard to track visits, it does not disclose the full breakdown of how ad money is being spent or how much value is being returned. One merchant noted that visibility data only started appearing in the last five to six months. Before that, they had no metrics at all.
Swiggy’s Self Serve Ads: A More Transparent Model?
Swiggy says its ad platform puts control in the hands of restaurant partners. Through the Self Serve Ads tool, restaurants can create their own campaigns, adjust daily spends, and track how those campaigns perform. The company promotes the tool as flexible and cost-effective, with no upfront payments.
The onboarding process is laid out step-by-step: restaurants upload documents like GST and Food Safety and Standards Authority of India (FSSAI) certificates, complete Know Your Customer (KYC), and sign a Partnership Agreement after a verification visit from a Swiggy representative, As per Swiggy, commissions are based on location and whether a restaurant opts for extra promotions.
Compared to Zomato’s Sponsored Listings model, which some restaurant owners say they didn’t fully understand when signing up, Swiggy’s approach looks more structured and consent-driven, at least on the surface.
But that clarity doesn’t always hold up. One of the restaurant owners told MediaNama that Swiggy’s model isn’t entirely different from Zomato’s. “You have to pay them if you want your restaurant to show up in search. It’s the same thing, just framed differently,” the owner said, suggesting that visibility on the platform often comes at a cost, regardless of how the ad system is marketed.
Advertising as a Structural Lever in Quick Commerce
Restaurant owners have flagged the rising costs and opacity of advertising on platforms like Zomato. But industry research shows that this isn’t just a revenue stream but it’s central to how delivery platforms, especially in quick commerce, are designed to operate.
A September 2024 report by CLSA, titled App-racadabra- Magic Behind Instant Delivery Liberating Customers, found that ad revenue makes up around 3.5% to 4.5% of gross merchandise value (GMV) on Zepto. That figure is only expected to grow as more brands start recognising the significance of quick commerce.
Interestingly, Zepto doesn’t just run ads for brands that sell on its platform. It also allows companies to advertise even if they aren’t listed, using spaces like the order tracking page, according to the report.
Quick commerce platforms can also use past purchase data to deliver more targeted ads and push higher-value products – what the report calls driving “premiumisation” of fast-moving consumer goods (FMCG).
Zomato’s quick commerce arm, Blinkit, is expected to lean heavily on ads to hit profitability targets. CLSA notes that Blinkit’s margins could eventually exceed those of food delivery, given the larger potential for ad revenue and the shift toward higher-margin categories.
The report adds that quick commerce is especially useful for smaller or direct-to-consumer (D2C) brands. These businesses can tap into a pan-India audience without having to build their own distribution networks.
The CLSA findings reinforce how advertising isn’t just about visibility, but it is baked into the business model. As margins tighten, discovery on these apps is no longer organic but paid.
Expert View: Power, Visibility, and Platform Dependence
These patterns mirror broader trends across retail and platform ecosystems, not just food delivery.
Devangshu Dutta, the Founder and Chief Executive of specialist consulting firm Third Eyesight, told MediaNama that these dynamics are not unique to Zomato or even food delivery.
“Advertising and promotion focussing on specific brands or products is standard across various platforms and formats. It is an outcome of the balance of power between the platform and the supplier brand, and is equally true of physical retail chains, online marketplaces and aggregation platforms such as Zomato,” he said.
Brands or restaurant chains with deeper pockets tend to secure greater visibility—whether through premium shelf space in physical stores or prominent placements like sponsored listings and banners on delivery platforms.
“Demand-side concentration inevitably favours larger suppliers and brands who can fund visibility, whether it is through endcap displays in a retail aisle or sponsored banners or top-of-search-list positions on an app,” Dutta stated.However, he noted that some established brands may choose to bypass platform dependence altogether.
“If brands are well-established or have other means to ensure that their message and product reaches the target consumer, they may choose to opt out of the channel, as many restaurants have done with Zomato and Swiggy,” Dutta explained.
How Can Restaurants Push Back?
In the context of restaurants displaying resistance to food delivery apps, one of the restaurant owners said that small restaurants need to come together.
“There should be local unions who can stand up to Zomato. And there should be a blanket rule on how much ad spend is allowed, so merchants don’t fall into this trap,” the owner said.He added that Zomato seems to earn more from merchants than from customers. “Whatever we pay to be visible, it all goes into the platform’s pocket”, he explained.
Further, he argued that without collective action, individual pushback rarely works. “The minute we stop ad spend, our listings drop to the bottom. So we need to walk together. If even 30% of merchants stop ads at once, it will force a reaction.”
Why This Matters
As India’s online food delivery market continues to grow, so does the reliance of small businesses on platforms like Zomato. However, these platforms are acting as gatekeepers by deciding who gets seen, how often, and at what price.
By tying discovery to opaque algorithms and costly ad spends, they tilt the playing field in favour of businesses that can afford to pay more. In such a system, can small restaurants survive?
And the issue goes beyond advertising. Zomato recently paused its 50:50 refund-sharing policy after public backlash and partner complaints. Restaurant owners said the company auto-enabled the policy and deducted money without consent or clear explanation. As with ads, there was no transparent opt-out process or formal appeal.
Together, these practices raise broader concerns: Should platform-led monetisation come with stricter disclosure norms? Can regulators step in to ensure pricing fairness and transparency in merchant contracts? And what role can merchant collectives play in counterbalancing this power?
For now, many restaurant owners feel caught in a system that offers visibility and participation at a cost they cannot afford and exit without impact.
(Published in MediaNama)
admin
June 1, 2025
Sharleen Dsouza, Business Standard
Mumbai, 1 June 2025
Reliance Consumer Products is in a sweet spot – and it intends to stay there. Launched barely three years ago, the company has already entered the list of India’s top 10 fast-moving consumer goods (FMCG) players by revenue in the 2024-25 financial year (FY25).
After making headlines by acquiring Campa Cola in 2022 — and taking the brand overseas in under two years — Reliance Consumer Products quickly expanded into food and non-food categories under the ‘Independence’ brand. Now, it has trained its sights on a new frontier: Confectionery.
This marks the company’s third major focus area after gaining traction in beverages and staples. Though present in biscuits and namkeens, its immediate priority is grabbing a share of the Indian consumer’s pocket change — via candies, chocolates, and toffees.
Its entry into the confectionery business began quietly in 2022 with a pilot of Joyland candies in Uttar Pradesh. It soon went on an acquisition spree — first picking up the 30-year-old Maharashtra-based Toffeeman brand in 2023, followed by a 51 per cent stake in Lotus Chocolates, and then acquiring the 82-
year-old Ravalgaon, home to nostalgic brands like Pan Pasand, Mango Mood, and Laco. It has been steadily building a formidable candy arsenal.
However, the Mukesh Ambani-led company isn’t limiting itself to Re 1 or Rs 2 price points. According to a source, it is developing an end-to-end confectionery portfolio — across toffees, candies, and chocolate-based products — and plans to enter sub-segments like gums, jellies, and lollipops. It is also betting on old-school favourites, launching chocolate-based confections such as eclairs, Lotus Symphony (toffee with a chocolate centre), and Lotus Zellers (moulded chocolate miniatures).
It is piloting distribution in five states — Maharashtra, Karnataka, Telangana, Andhra Pradesh, and Uttar Pradesh — with plans to go pan-India this fiscal and reach one million outlets, the source added.
Why the big bet? The Indian confectionery market is expected to grow from Rs. 37,900 crore in 2024 to~59,700 crore by 2033, at a compound annual growth rate of 5.2 per cent, according to global consultancy IMARC Group. North India leads the market with a 32.8 per cent share. IMARC adds that modern retail formats, better digital connectivity, and product innovation are driving market penetration in both urban and semi-urban areas.
India’s sweet tooth has deep roots. Parle began selling candies in the 1920s, followed by Ravalgaon —now part of Reliance Consumer Products’ growing portfolio – in the 1940s.
Experts say the company’s strategy from the start was clear: Dominate. And it has the war chest to play the long game.
“Over two decades, Reliance has gained consumer-side experience and enormous momentum through various retail formats, and has figured out vertical integration in procurement,” said Devangshu Dutta, chief executive officer of consultancy Third Eyesight.
“Its experience in staples comes from private labels, and starting with Campa, its acquisitions in food, beverage and FMCG have grown. As a group, it has the muscle and a long-term approach to make a mark in the market.”
Dhanraj Bhagat, partner at Grant Thornton India LLP, pointed out thatthe FMCG market is notoriously tough — especially when scaling regional brands nationally. “But Reliance has deep pockets for brand building,” he said. That’s what sets it apart — it can spend big and be patient, he added.
While the company is making a dent via its distribution penetration strategy, it also needs to spend on publicity, Bhagat added. “Reliance has the money, so it is a different ball game for it as this gives the company the ability to spend and play the long-term game.”
Reliance Consumer Products is also offering higher margins to distributors in categories like Campa and confectionery, giving it a competitive edge. Its aggressive incentives have forced rivals to raise their own distributor margins — a sign of how this sweet battle is heating up.
(Published in Business Standard)
admin
May 25, 2025
Gargi Sarkar, Inc42
25 May 2025
SUMMARY: Swiggy and Zomato are scaling back non-core bets such as 10-minute food delivery, private labels, and event logistics to sharpen focus on core businesses and improve profitability. Both companies are betting on platform fees and selective verticals like quick commerce and ticketing, but analysts warn that financial discipline, not endless expansion, is key to long-term sustainability. The foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses
For foodtech giants Swiggy and Zomato (now Eternal), the last few years have been about engaging in a battle for expansion, so much so that it has become difficult to tell them apart.
From quick commerce and cloud kitchens to intercity food delivery and even selling tickets for events and concerts, the two companies appear to be aping each other’s every move to be everything everywhere all at once.
However, what began as a bold bet to dominate every possible vertical falling under the ambit of food, lifestyle and entertainment is now undergoing a major course correction.
For starters, both are reconsidering their blitzkrieg, and while at it, they are gracefully stepping away from non-core bets, diluting underperforming or experimental units to focus on core operations to drive profitability.
For context: Zomato, which once saw the future of food logistics in ultra-fast deliveries, gave up on its 15-minute food delivery service, Quick, four months after its launch in January. It has also pulled the plug on its home-made meal service, Zomato Everyday. Tailored for office-goers and budget-conscious consumers, the service was floated in January 2025.
Swiggy, too, has made similar retreats. It suspended Swiggy Genie, its courier and pick-up-and-drop service that had gained popularity during the pandemic. The company also gave up on its private label food business by entering a strategic agreement with Kouzina, a chain of virtual restaurants, granting it exclusive rights to operate Swiggy’s digital-first food brands.
So, what has triggered this metaphorical fission in strategy?
One possible reason could be the growing realisation that profitability hinges on diversifying smartly rather than untamed expansion.
A market analyst, who did not wish to be named, pointed out that the duo’s attempt to rule their customers’ wallets for everything from food to groceries and entertainment to lifestyle has been quite ambitious. “The course correction was overdue,” the analyst said.
He believes that foodtechs are now forced to burn the visceral fat in the form of non-core businesses because those have been slowing them down, also eating into the revenues of core businesses and impacting operational efficiencies.
“Moreover, the more the segments, the higher the chances of operational hiccups. Managing logistics, customer experience, and quality control across a wide array of verticals inevitably leads to fragmentation and strain on core operations,” he added.
State Of Eternal Affairs: Zomato’s Diversification Saga
Eternal’s push to transform Zomato into a broader lifestyle platform in 2024 was not only about ambition but also a strategic response to a slowing core business — food delivery, according to industry observers.
Also, a glance at the table below reveals how the company has seen a marginal QoQ increase in its monthly transacting users.
In terms of monthly transacting customers, Zomato’s food delivery growth began strong with a 6.84% QoQ jump in Q1, but momentum quickly slowed, and Q2 saw only a 1.97% sequential rise, followed by a slight decline of 0.97% in Q3. This dip signalled stagnation, and although Q4 showed a mild recovery (1.95%), overall FY25 growth of the company’s monthly transacting users (food delivery) was modest at just 2.96%
Interestingly, Eternal founder and CEO Deepinder Goyal, too, acknowledged a slowdown in the company’s food delivery business while announcing the company’s Q4 FY25 results. He said the slowdown was due to rising competition from quick commerce platforms and weak discretionary spending. Goyal added that services like Zepto Cafe, Swiggy Snacc, and Blinkit Bistro, too, were eating into demand for restaurant deliveries.
In terms of Zomato’s food delivery numbers, average monthly transacting numbers grew to 20.9 Mn in Q4 FY25 from 20.5 Mn in Q4 FY24. Net order value (NOV) growth also remained subdued at 14% YoY versus the 20% YoY growth guidance.
Hence, the company was under pressure to unlock new revenue streams. Blinkit’s success became the reference point, and the company started envisioning similar success stories with other verticals too, a former Zomato employee said.
This was when the company got engulfed in the wave of diversification, paving the path for Zomato’s yet another bold move (besides Blinkit) — the INR 2,078 Cr acquisition of Paytm’s movies and events ticketing business, Insider, in August last year.
The acquisition that was planned with the launch of the ‘District’ app meant but one thing — declaration of war against BookMyShow, the lone behemoth in the realm of the entertainment ticketing segment. Even the company knew the path wouldn’t be all rainbows and sunshine.
In its Q4 FY24 earnings call, the management acknowledged that while the gross order value (GOV) of the going-out vertical continues to grow at over 100% YoY, the business still operates at an adjusted EBITDA loss of -2 to -2.5% of net order value (NOV).
Besides, given that the transition of users from Paytm’s ticketing business and Zomato’s dining out platform to the District app requires sustained investment, the company doesn’t expect the business to turn profitable in the near term.
But Zomato expects losses to eventually see stability at current levels.
“However, even with plateauing losses, the company will have to keep spending on creating supply. This means: curating new event experiences, forging partnerships and acquiring new users for the District app… and all of this translates into one thing — prolonged burn,” the market analyst added.
Moving on, Zomato’s ambition to become a lifestyle super app didn’t just manifest into flashy verticals like events, entertainment, and ticketing — it also showed up in its renewed aggression in food delivery, the very space where it first made its name.
Therefore, Zomato began piloting a 15-minute food delivery service in select parts of Mumbai and Bengaluru early this year.
But the company now finds the initiative extremely difficult to operationalise as it has failed to generate incremental demand.
“Customers do not necessarily want food fast, they just want it reliably. A 10-minute turnaround without full control over the supply chain leads to poor customer experiences, operational stress, and negligible upside. Instead of delighting users, it makes the company vulnerable to inconsistent quality and frequent delays,” a Zomato insider added.
Satish Meena, the founder of Datum Intelligence, opined that without controlling the entire supply chain, delivering food items within 10 to 15 minutes cannot be a profitable proposition.
Swiggy’s U-Turns
In 2024, also the year of its public listing, Swiggy aggressively expanded its service offerings, launching several new verticals to diversify beyond its core food delivery business.
Among the most prominent launches was Bolt, a 10-minute food delivery platform. Initially launched in Bengaluru, Chennai and Mumbai, Bolt quickly expanded to over 400 cities, with over 40,000 restaurants, including KFC, McDonald’s and Starbucks.
To complement Bolt, Swiggy introduced Snacc, a separate app for instant delivery of snacks, beverages, and small meals within 15 minutes.
Continuing to diversify its portfolio, Swiggy launched Pyng, an AI-powered platform that bridges users with verified experts like yoga teachers or chartered accountants.
With this, Swiggy marked its entry into the on-demand services marketplace, making professional services easier to access.
Apart from these customer-facing services, Swiggy also entered events via Scenes and the B2B space with Assure, to keep pace with Zomato.
Interestingly, Swiggy, too, has begun consolidating its operations. The company has shut down Genie, its hyperlocal courier business, which competed with Porter, Borzo and Uber.
According to a competitor, sourcing delivery riders specifically for packages is a challenge, particularly in cities like Bengaluru. For Swiggy, which was already managing fleets for food delivery and quick commerce through Instamart, sustaining a separate rider network for Genie only added to the complexity.
In another such move, Swiggy exited its private label food business by transferring exclusive rights for its digital-first brands, including The Bowl Company and Homely, to cloud kitchen operator Kouzina.
Balance Sheet Blues
Imperative to highlight that the rollbacks by Zomato and Swiggy are rooted in the growing pressures on their respective balance sheets.
After diversifying at a breakneck speed, they are now faced with the hard realities of cost structures that don’t always align with revenue potential.
In Q4 FY25, Zomato and Swiggy both reported robust top-line growth. Zomato’s revenue surged to INR 5,833 Cr, largely buoyed by its three core pillars — the food delivery business (INR 1,739 crore), Blinkit’s quick commerce arm (INR 769 Cr), and Hyperpure, its B2B supply chain vertical, which posted a 99% YoY growth in revenue to INR 1,840 Cr.
However, despite the momentum, the company’s net profit declined sharply to INR 39 Cr in the quarter, largely thanks to ongoing investments in Blinkit and newer bets like the ‘District’ lifestyle app.
Meanwhile, Swiggy clocked INR 4,410 Cr in revenue in Q4, up 45% YoY, but saw its net loss nearly double to INR 1,081 Cr. The widening losses were fuelled by surging operational expenses.
“All of this explains the strategic pullbacks witnessed lately, Swiggy exiting Genie and private labels, Zomato pulling the plug on services like Quick and Legends. The rationalisation marks a reset, indicating that while growth via diversification was necessary, financial discipline and profitability are in the spotlight,” the market analyst said.
Platform Fee To The Rescue… But For How Long?
While it won’t be easy for Zomato and Swiggy to suddenly change course, the future of these two foodtech giants is all about heading towards a more focussed set of revenue streams driven by value rather than FOMO.
In the process, both foodtech giants appear to have struck gold with the platform fee, which has grown from just INR 2 in 2023 to INR 10 today.
But the real question is: Can rising platform fee help the duo neutralise the impact of aggressive expansion? Or is rationalisation the only way forward?
Devangshu Dutta, the founder of Third Eyesight, thinks otherwise. He believes that the companies will not stop looking for new revenue streams, even as they will continue to amputate the ones that offer little value.
“All of these companies have to look for growth, which is a given. If their existing businesses are not delivering the kind of growth they need to justify their stock price or valuation, then they have to look at new avenues.”
According to him, we are bound to see a flurry of experiments, trials of different services and new verticals as these companies attempt to expand their addressable markets.
At the end of the day, the foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses.
[Edited by Shishir Parasher]
(Published in Inc42)