Ride-hailing firm Rapido plans to launch a food delivery service with commission rates ranging from 8% to 15%.

This is in contrast to the 16% to 30% rates charged by competitors Zomato and Swiggy.

Under the new service, Rapido will charge a fixed fee of 25 rupees (US$0.30) for orders below 400 rupees (US$4.80) and 50 rupees (US$0.60) for orders above that amount.

Customers can place food orders through the Rapido app, which will feature a list of participating restaurants.

The service is expected to pilot in Bengaluru by the end of June or early July.

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🔗 Source: The Economic Times

🧠 Food for thought

1️⃣ Commission wars signal potential reshaping of India’s food delivery duopoly

Rapido’s entry with dramatically lower commission rates directly targets the most controversial aspect of the existing food delivery ecosystem.

The 8-15% commission structure represents a reduction of up to 50% compared to the 16-30% that Zomato and Swiggy typically charge restaurants 1.

This pricing strategy follows growing restaurant dissatisfaction, exemplified by public complaints from business owners like Vandit Malik of The Garlic Bread, who claimed the incumbent platforms were “becoming unsustainable for small restaurant owners” 2.

The Competition Commission of India has already flagged potential market imbalances in Zomato and Swiggy’s operations following complaints from the National Restaurant Association of India, indicating regulatory concern about the current duopoly structure 3.

With Zomato controlling 54% and Swiggy 46% of India’s food delivery market, Rapido’s disruptive pricing threatens to fragment a highly concentrated industry that currently gives restaurants few alternatives 4.

2️⃣ Hidden costs create significant financial burden beyond the visible delivery fees

The true cost of food delivery extends far beyond the advertised prices, with research showing consumers pay an average “aggregator premium” of Rs 46 per dish compared to restaurant-owned delivery platforms 5.

This premium translates to an annual financial burden of approximately Rs 12,000 for households in metro areas, with the combined hidden costs across India estimated at Rs 9,000-11,000 crore annually 5.

For restaurants, these platforms impose multiple fees, including commissions, setup costs, packaging charges, and delivery fees, which can substantially impact profitability, particularly for smaller establishments 6.

A restaurant generating ₹1,00,000 in sales through Swiggy would typically pay around ₹20,000 in commission at a 20% rate, significantly reducing already-thin profit margins 6.

Rapido’s fixed fee model (Rs 25 for orders below Rs 400, Rs 50 for orders above) creates pricing predictability that both restaurants and consumers have been seeking, potentially addressing a key pain point in the current ecosystem 1.

3️⃣ Small restaurants stand to gain most from commission reductions

Delivery services now represent nearly 25% of daily revenue for some restaurants, making commission structures a critical factor in their financial sustainability 7.

The existing high commission rates disproportionately impact smaller establishments that lack the negotiating power of larger chains, forcing many to operate at minimal profit margins on delivery orders 8.

Beyond commissions, restaurants face operational challenges with current platforms, including manual order entry, lack of POS integration, delayed payments (often weekly rather than daily), and being charged for delivery errors beyond their control 7.

Rapido’s lower commission strategy specifically targets this segment, with the company explicitly stating that its model will “specially help small restaurants” 1.

The pilot launching in Bengaluru will test whether this pricing approach can create a more sustainable ecosystem that benefits the thousands of small restaurants that have been squeezed by the current duopoly structure 1.

Recent Rapido developments

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