admin
February 14, 2026
This episode of theUpStreamlife is a freewheeling conversation between Vishal Krishna and Devangshu Dutta, founder of Third Eyesight, with insights into the growth of modern retail and consumption in India, brand building and M&A, the balance of power between brands and retailers/platforms, sustainability vs growth and many other aspects, and is well-suited for founders and teams who want to be building for the long run in India.
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
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)
admin
January 9, 2025
Sagar Malviya, Economic Times
9 January 2025
Starbucks, Barista, Chaayos and Third Wave Coffee are among café chains facing the brunt of a slowdown in discretionary consumer spending. The impact is more severe for these retailers as they opened hundreds of new stores last fiscal year even as losses widened. To be sure, smaller chains such as Tim Hortons and Blue Tokai have bucked the trend.
Experts attribute the expansion rush to the urge among these retailers – both chains and standalone stores – to outpace competition. In certain instance, it led the same retailer to add stores in the same location, impacting its own growth instead of growing the pie.
At Rs 250 to Rs 350 for a cup of coffee, most chains target affluent, discerning coffee enthusiasts with artisanal brewing and experiential consumption, restricting the consumer base.
Devangshu Dutta, founder of retail consulting firm Third Eyesight, said the number of outlets have been expanding since 2022.
This was true for not just the new brands but also existing ones, Dutta said. “Cafe density in larger cities has gone up dramatically in the last couple of years.”
Growth rate fell to just 5% in FY24 from nearly 70% at Barista and Chaayos while Starbucks’ sales growth declined to 12% in FY24 from 70% in FY23. Third Wave saw sales growth slump to 67% from 355% during the period. Cafe Coffee Day posted a 9% increase in FY24, though sharply slowing from 59% a year ago.
Tim Hortons, however, more than doubled its sales last fiscal, its first full year of operations. Blue Tokai also bucked the slowdown trend with a 70% growth in FY24, compared to 73% in FY23.
Blue Tokai cofounder Matt Chitharanjan believes growth in India’s out-of-home coffee market is more than just a caffeine surge—reflecting the country’s shifting economic fabric. “Coffee consumption is strongly linked to income growth and India has reached a tipping point where it will support growth in the segment and should only accelerate going forward,” Chitharanjan told ET. “We have not seen any slowdown in coffee consumption and our positioning is also more product centric instead of just a cafe, which helped in double-digit same store sales growth.”
Tim Hortons, a Canadian coffee chain, which opened its first outlet in India in 2022, plans to have over 100 stores in the next three years. British coffee and sandwich chain Pret A Manger too launched its first shop in Mumbai as part of a franchise agreement with Reliance Brands. It plans to open up to 100 stores over the next five years. Third Wave and Blue Tokai are running more than 250 stores combined while Starbucks had over 330 stores as of March-end.
Tata Starbucks—the equal JV between Tata Consumer Products and US-based Starbucks Corp—said store footfalls have become a concern and the company has tweaked portfolio and pricing to attract traffic. Last year, the chain introduced classic hot and iced coffee starting at Rs 150 for a small cup, about 20-30% cheaper than regular coffee offered at Starbucks and other cafe chains.
“The stress is being seen across the quick service restaurant segment. It’s an overall consumer spending issue, especially in urban areas. And my hypothesis is probably food inflation is higher than what we think,” Sunil D’Souza, MD at Tata Consumer Products said during the December quarter earnings call.
Globally as well as in India, coffee growers have been hit with uncertain weather conditions while geopolitical factors are also affecting supply chains, which in turn, lifted prices to a record high. “The biggest challenge is erratic weather and climate change which has sent coffee prices to a 50-year high, but we will have to see how it impacts our pricing and profit after the current harvest,” said Chitharanjan at Blue Tokai.
(Published in Economic Times)