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Right Now (The StartUp Newsletter) Jul'20

Updated: Aug 1, 2020

We did some number crunching and deep diving into the operations of Swiggy and Zomato and the taste came out unbelievable. Afterall, what else can you expect when Swiggy and Zomato are delivering, right?

So here’s our analysis delivered right at your doorstep!


Supply Chain Analysis

The supply chain of the food industry is ever changing since time immemorial. If you are thinking it is finally maturing, then you my friend are still naïve.

Indian food and beverage industry is poised to touch $46 Billion by the end of 2020, providing employment to 9 million by 2021.

We brought down the entire supply chain into 6 distinct segments, diving deeper into each one them:

Cultivation of Fruits, Vegies, Spices, Rearing of Animals

Startups in this sector: Fasal, Freshokartz, Gramophone. Swiggy & Zomato have not entered this sector yet.


Startups in this sector: Farmlink, MeraKisan, FarmersFZ. Swiggy & Zomato have not yet entered this sector.

Food Processing

Startups in this sector: Intello Labs, WayCool Foods & Products. Swiggy & Zomato have not yet entered this segment.

Distribution to HORECA

HORECA - Hotel, Restaurant, Cafe


  • Although Swiggy entered into the Food delivery space much before Zomato, Zomato has the first mover’s advantage in this segment.

  • Swiggy has entered this segment very recently (May 2020), by the name of Swiggy Staples Plus.

  • It delivers grocery, meat, veg and other supplies along with packaging material to restaurants.

  • These are provided on credit basis.


Zomato already has this service offering in the form of Zomato’s Hyperpure (an end-to-end technology driven solution):

  • Currently serves 7500 restaurants across Delhi and Bengaluru.

  • Already has 30,000 sq ft warehouse.

  • Directly connects with farmers, mills, producers and processors to source the raw material.

  • Recently opened a 10,000 sq. ft. warehouse in Mumbai.

Other players in this segment: NinjaCart and WayCool.


Cloud Kitchen (Swiggy):

  • Model: Swiggy sets-up a kitchen, investing in state-of-the-art kitchen equipment and real estate, taking ownership of the setup. This setup does not have any front-end. All orders are received over Swiggy’s app and delivered at customer’s doorstep. Swiggy functions by the name of Swiggy Access and Swiggy Pods in this segment.

  • Is this model good?: This kitchen becomes a direct competitor of all restaurants listed on Swiggy. Data of all restaurants listed with Swiggy can be used to come up with the best fit solution.

  • Scale: Total investment - ₹175 Cr. Over 1Million sq. ft. to enable over 1000 Access kitchens across the country.

  • Investment in Kitchen Equipment: ₹17 Crores (as per financials)

Shadow Kitchen (Zomato):

  • Model: Zomato develops a kitchen, investing in start-of-the-art equipment and real estate, much like Swiggy. However, this kitchen is then leased out to HORECA brands like Haldiram, Keventers and Freshmenu, to name a few (Much like WeWork of Kitchen). Management of the kitchen is done by the HORECA brand, while order processing and last mile delivery are handled by Zomato.

  • Is this model good?: Zomato clarified that it will never compete with its restaurant partners and the company will only help in building kitchens, which will be operated by restaurant brands.

  • Scale: In total, there are 663 kitchen units and kiosks in India, developed by Zomato.

  • Investment in Kitchen Equipment: ₹5.5 Crores (as per financials)

Last Mile Delivery

Food Delivery Segment of India. Numbers:

  • 146 Startups

  • 2 Unicorns

  • The sector is currently growing by 16% YoY

  • 560,000 people employed in the sector (as of 31st March'20)

  • 90% of orders in this segment are fulfilled by Swiggy & Zomato

  • India will have a market size of $17 Billion by 2023 (China will zoom to $50 Billion)

Fresh Ideas Delivered:

  • Drone Deliver - Sitting today, we may believe that modern ways of food delivery have indeed been revolutionized by Swiggy & Zomato. But even this concept may become redundant in a few years with the advancement in drone tech and related policies. Some perspective -, a Chinese food delivery platform uses drones for 70% of its deliveries. So are Indian startups sitting ducks? Not really! Zomato acquired TechEagle Innovations in 2018, which is into Drone tech (refer coverage on acquisitions).

  • Hyperlocal Delivery - Hyperlocal delivery comprises of B2C and C2C deliveries within a city. Some key players: Dunzo (pioneer, backed by Google), Swiggy Genie (launched during lockdown), Uber Connect (launched during lockdown).

  • Grocery Delivery, Milk Delivery, Tiffin Delivery and other niche areas - Key players include: Groffers, Big Basket, Superdaily, Zomato (Zomato quit this segment sometime back)


Idle Fund Analysis

Our Take:

  1. This idle capacity arises due to the inherent nature of the business that demands having a well spread workforce that covers maximum corners of the city. To add to that is the rapid geographical expansion drive by both the unicorns with a present penetration of 500+ cities in India (for both).

  2. The primary objective thus far has been to create a sense of omnipresence of the brand which gives the users unmatched convenience of use and slowly feeds into their subconscious that ordering-in is definitely the new way of life.


The Big Fat Advertisement Cost

  • The marketing cost/revenue ratio of both the companies is rising. This means that technically the product offering is still in the nascent stage of its life cycle. It could also mean that the deeper they penetrate into the market, the tougher it gets to raise the number of orders per day (concerning).

  • As per Unomer, Zomato's app is installed in 12% of all Indian smartphones while Swiggy's app is in 10% of the smartphones. (This in itself is evidence enough to show that the majority of the market is still untapped.

  • Zomato’s marketing cost and the ratio shot up significantly in 2018 as it raised significant money in the year, most probably with the objective of blitz scaling and also because it entered the last mile delivery segment in the same year.

  • Swiggy’s ratio is significantly lesser also because as per Data Labs, it enjoys the most positive brand sentiment of consumers vis-à-vis its peers.


You can read the entire newsletter here.


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