India’s leading food delivery platforms, Zomato and Swiggy, are facing financial challenges due to increasing operational costs and intensifying competition from quick commerce (q-comm) players like Blinkit and Zepto.
– Zomato’s net profit dropped 57% YoY to ₹59 crore in Q3FY25.
– Swiggy’s losses widened significantly, rising from ₹574.38 crore in the previous year to ₹799.08 crore in the same period.
Revenue Growth vs. Expense Surge
Despite revenue growth, rising expenses are squeezing profitability.
– Zomato’s revenue jumped 64% to ₹5,405 crore, but its expenses surged 63.55% to ₹5,533 crore.
– Swiggy’s revenue grew 31% to ₹3,993 crore, while expenses climbed 32.38% to ₹4,898.27 crore.
Slower Food Delivery Growth
While both platforms saw an increase in Gross Order Value (GOV), growth is slowing down:
– Zomato’s GOV for food delivery grew 17% YoY to ₹9,690 crore but only 2.3% sequentially.
– Swiggy’s GOV increased 19.2% YoY to ₹7,436 crore, but only 3.4% QoQ.
– The slowdown, which began in November, has impacted overall performance.
Quick Commerce & Competitive Pressure
The quick commerce sector is becoming increasingly competitive, further straining the profitability of food delivery businesses:
– Zepto is aggressively expanding, burning ₹350-400 crore per month.
– Blinkit and Swiggy Instamart are also heavily investing to stay ahead.
– Blinkit’s adjusted EBITDA margins remained at -1% to -1.0% in Q3FY25.
– Instamart’s margins fell from -10.6% to -14.8%, highlighting increased losses in the q-comm segment.
Zomato’s Name Change to ‘Eternal’
As quick commerce becomes a major growth driver, Zomato has announced a rebranding to ‘Eternal’. This reflects its evolving business model beyond just food delivery.
Deepinder Goyal, CEO of Zomato, stated:
“We considered renaming Zomato when Blinkit became a significant part of our future.”
Under the Eternal brand, the company will manage all its businesses:
– Zomato (Food Delivery)
– Blinkit (Quick Commerce)
– Hyperpure (B2B Supply Chain)
– Feeding India (Charity Initiative)
However, the stock market ticker will remain ‘Zomato’.
As costs rise and competition heats up, Zomato and Swiggy must navigate challenges in both food delivery and quick commerce. While q-comm presents a high-growth opportunity, its cash burn and tight margins could continue to pressure profitability in the near term.