Media365
Rapido is taking direct aim at India’s food delivery duopoly, arguing that the industry’s biggest challenge is not competition but affordability. The ride-hailing platform believes the online food delivery market must more than double over the next few years — and says its own future depends on making that happen.
“If the number of people ordering food online doesn’t reach 100 million in three years, there is no reason for Rapido to exist,” Rapido co-founder and chief executive officer Aravind Sanka said in an interview with Moneycontrol, laying out the company’s long-term vision for Ownly, its recently launched zero-commission food delivery platform.
The comments come shortly after Rapido raised $240 million in one of the largest funding rounds in India’s startup ecosystem this year, as the company looks to expand beyond mobility into food delivery while leveraging the logistics network it has built over the past decade.
Betting on market expansion, not market share
Unlike rivals focused on gaining market share, Rapido says its strategy is to expand the overall food delivery market by making online ordering affordable for millions of consumers who have yet to use such services.
According to Sanka, India’s online food delivery market has reached a plateau because prices paid by customers have drifted too far from what restaurants charge offline.
Market leader Zomato currently has around 25 million monthly transacting users, while Swiggy has around 18 million. Sanka believes the combined user base needs to exceed 100 million if online food delivery is to become a truly mass-market service.
“We’ve doubled the market size of every category we have entered so far. The same will happen with food delivery,” he said.
Rather than competing through discounts, Rapido says affordability will be the key driver of the next phase of growth.
Why Rapido believes the current model is broken
Sanka argued that the industry’s reliance on restaurant commissions, advertising, delivery charges and mark-ups has pushed online prices well above what customers pay at restaurants.
A meal costing between Rs 80 and Rs 120 at a restaurant can end up costing Rs 250 to Rs 300 once commissions and delivery-related charges are added, he said. That price gap, according to Rapido, discourages both customers and smaller restaurants from participating in online food delivery.
The company also believes the existing platforms have focused largely on national restaurant chains while overlooking thousands of regional and neighbourhood eateries.
“Swiggy and Zomato are built only for nationalised chains, or brands. Not for the local and regional ones,” Sanka said, adding that many family-run restaurants do not see value in paying commissions and advertising fees simply to appear on delivery platforms.
He also claimed the leading food delivery companies have done little to create new restaurant brands, contributing to slower market expansion.
Zero-commission strategy
Rapido’s answer is Ownly, a platform built around a zero-commission model.
Instead of charging restaurants commissions, the company plans to keep menu prices identical to those offered at restaurants while asking customers to pay separately for delivery. Rapido believes it can generate sustainable margins through operational efficiency rather than higher commissions.
“We like growing a category, rather than taking away market share from some players or even fighting them on prices. In food delivery, we have to solve for affordability. That is the biggest deterrent for consumers today,” Sanka said.
The company insists that lowering the overall cost of ordering food online will encourage millions of first-time users to enter the market.
Logistics is Rapido’s biggest advantage
Rapido argues that food delivery is fundamentally a logistics business rather than a restaurant business.
The company currently operates a network of more than 3 million captains and handles over 7.5 million daily orders across bike taxis, auto-rickshaws, cabs, parcel deliveries and other services.
Its strategy is to use the same logistics network throughout the day, allowing riders to switch between transporting passengers, delivering food and handling hyperlocal parcels depending on demand.
“Delivery companies are logistics companies. We don’t make food. We don’t run restaurants. We solve logistics,” Sanka said.
Rapido believes keeping its rider network consistently occupied will allow it to maintain lower delivery costs than competitors.
Bike taxis remain core business
Despite the company’s food delivery ambitions, Sanka said bike taxis remain Rapido’s fastest-growing business and continue to receive the bulk of its investments.
The company has expanded from roughly 100 cities to nearly 500 over the past 15 months, with smaller cities emerging as major growth drivers.
Sanka pointed to Khammam in Telangana, which has a population of about 300,000, as an example. The city now generates more Rapido orders than Pronto, the company’s food delivery service, does in Delhi, highlighting the growing demand for mobility services beyond India’s largest metropolitan areas.
Most of the recently raised capital will continue to be deployed in expanding bike taxis, auto-rickshaws and cab services while Ownly works towards achieving product-market fit.
One business at a time
Sanka said Rapido has deliberately avoided expanding into multiple businesses simultaneously.
The company spent seven years building its bike taxi business before entering autos, followed by cabs and now food delivery. Over the next two years, he said, the priority will be refining the food delivery model rather than diversifying into adjacent sectors such as quick commerce.
He also ruled out operating cloud kitchens or managing inventory-heavy businesses, saying Rapido intends to remain an asset-light logistics company.
Eleven years after starting as a bike taxi startup, Rapido now sees itself as a logistics platform capable of moving people, meals and parcels through a common rider network. Whether that strategy can disrupt the dominance of Zomato and Swiggy remains to be seen, but the company is betting that India’s food delivery market has only begun to scratch the surface.
