Food Delivery Economics: Zomato’s Average Order Value at Rs 350, Yielding Over Rs 100 in Revenue and Rs 35 Contribution Margin Per Order
New Delhi, June 11, 2025: The entry of ride-sharing companies into India’s online food delivery market is shaking up the established duopoly of Zomato and Swiggy, as these newcomers can operate on slimmer margins or even at break-even in their initial years, according to a recent HSBC Global Investment Research report.
Rapido, a prominent ride-hailing platform, announced its foray into food delivery this month. The report notes that the government-backed Open Network for Digital Commerce (ONDC) posed a similar challenge in 2023 but failed to significantly disrupt the Zomato-Swiggy stronghold.
Cost Dynamics: Ride-Sharing vs. Food Delivery
The economics of two-wheeler (2W) ride-sharing and food delivery (FD) are strikingly similar, yet food delivery offers higher profit margins and a larger market. The HSBC report highlights that the average order value (AOV) for 2W ride-sharing is approximately Rs 70, with a contribution margin (CM) of Rs 3-4. In contrast, Zomato’s food delivery generates over Rs 100 in revenue per order, with a contribution margin of Rs 35, while delivery costs remain comparable.
For Zomato, the average food delivery order value stands at Rs 350 (post-discounts), with total delivery costs, including rider fees, discounts, payment gateway charges, and customer support, ranging between Rs 65-70. For ride-sharing, the AOV is Rs 70, with variable costs around Rs 65, though food delivery incurs slightly higher expenses due to additional discounts and support costs.
Strategic Advantage for New Entrants
Ride-sharing companies like Rapido can leverage their existing logistics infrastructure to enter food delivery with competitive pricing. By operating on lower margins initially, they could reduce restaurant commissions by 4-5% or offer free delivery to customers, posing a direct challenge to Zomato and Swiggy’s pricing models. Zomato, handling 2.6 million orders daily, achieves a 4.4% EBITDA margin but charges restaurants a 25% take-rate and customers an additional 4-5% delivery fee—among the highest globally.
Challenges Ahead
Despite the attractive economics, new entrants face hurdles in maintaining customer experience, executing effectively, and achieving scale. The report suggests that ride-sharing companies may initially capture less profitable segments of the market, limiting their immediate impact on the Zomato-Swiggy duopoly.
As ride-sharing platforms like Rapido dive into food delivery, the industry braces for increased competition, potentially reshaping pricing, customer expectations, and market dynamics in India’s rapidly growing online food delivery sector.