Rapido's Next Ride: From Bikes To Bites, Challenging Swiggy, Zomato Head-On

Rapido, a name synonymous with two-wheeler ride-hailing, is now poised to redefine disruption in India’s food delivery space.

The firm is now making its audacious move into the food delivery space by test piloting an online food delivery app in Bengaluru. This isn't just an extension of services; Rapido is likely to launch a completely new platform dedicated to direct-to-consumer food delivery.

The pilot program aims to leverage Rapido's existing 'captain' (driver) network and assess its potential to complement their existing services.

This new food delivery platform is designed to be a significant disruptor, mirroring the strategy Rapido successfully deployed against Ola and Uber.

Rapido first carved its niche by focusing on two-wheeler transport in tier 1 and tier 2 cities. This is where its disruptive strategy was first perfected. Unlike Ola and Uber, which levy a commission of up to 30% from their riders, Rapido implemented a distinct approach—a fixed subscription fee for its drivers. Rapido is now implementing the same strategy to disrupt the food delivery space. It will operate on a zero-commission model, meaning restaurants will only pay pre-determined delivery charges, rather than a percentage of their order value.

The company has raised approximately Rs 4,800 crore across 12 funding rounds. A recent infusion of Rs 250 crore came from Prosus, securing the investor a 2.9% stake. The largest fundraising round, amounting to Rs 1,720 crore, was successfully closed in June 2024 with WestBridge Capital.

Prior to that, in 2022, food delivery major Swiggy invested roughly Rs 1,300 crore, and TVS contributed approximately Rs 114 crore. As of September 2024, Rapido’s valuation stood at $1.1 billion.

In fiscal 2024, Rapido reported a revenue of Rs 695 crore, alongside a loss of Rs 370 crore. Its cash balance at the end of FY24 was Rs 240 crore. With an estimated cash burn of Rs 400 crore, the projected cash balance for FY25 is around Rs 1,500 crore. This significant cash reserve suggests that Rapido can indeed afford to burn cash for now as it expands its operations and challenges new markets.

Rapido’s food delivery entry brings it directly into the highly competitive arena dominated by Zomato and Swiggy. In Bangalore's food delivery market, Zomato holds a 55-58% market share, while Swiggy commands 42-45%.

This is where Rapido's proven disruptive model comes into play, implementing the same strategy it used to challenge Ola and Uber’s business. While Swiggy and Zomato currently charge commissions of up to 30% from restaurants, Rapido's new platform will charge zero commission from them initially, with restaurants paying only pre-determined delivery charges. Eventually, a flat subscription fee will be implemented once scale is achieved. This no-commission model, combined with customers not paying for packaging and the dish price being the final price (matched to offline pricing), offers a fundamentally different proposition.

The impact on Swiggy and Zomato is expected to be significant, as their contribution margins will be directly affected by a potential decrease in commission-based revenue if Rapido's model gains traction. By taking the exact blueprint that shook up the cab transport business, Rapido is now poised to fundamentally alter the economics of food delivery.