Food Delivery Giants Face the Heat: The Profitability Puzzle for Zomato & Swiggy

Whether a late-night snack or a quick lunch at work, Zomato and Swiggy have made it easy to get food delivered fast. While ordering food online has become a part of our everyday lives, behind this comfort, the two giants are struggling. With most metros already saturated and tier-2 cities slower to convert, the question isn’t just about growth anymore; it’s about profitability. Zomato and Swiggy are both growing, but not making enough profits.

The Profit Picture So Far

Zomato recently posted its third straight quarter in the green, reporting a consolidated net profit of ₹175 crore in Q3 FY24. That’s a big shift from the ₹347 crore loss in the same quarter last year. While it does signal progress, the gains haven’t mainly come from food delivery. A large part of the profit came from cost-cutting and returns on investments.

Swiggy, on the other hand, is getting ready for its IPO but hasn’t reached profitability yet. Its losses have reduced in FY23, but food delivery growth has slowed to about 17%, down from over 40% the previous year. Its grocery delivery service, Instamart, is still running at a loss and continues to consume a significant amount of resources. Source: Economic Times

What’s Making Profits Hard to Reach?

Although their services are much sought after and people order on both platforms regularly, Zomato and Swiggy are dealing with rising costs on many fronts: 

• They give discounts to attract customers.
• They pay delivery partners and give bonuses during peak hours.
• They spend a lot to expand into new cities and services, as attracting new customers in new cities is expensive.
• Prices of fuel, packaging, and other inputs have gone up.

As the above expenses keep mounting, it becomes challenging for the apps to build profits sustainably. 

Competition Stiffens Further

Rising competition is another big challenge for the food apps. Platforms like ONDC (Open Network for Digital Commerce) let restaurants sell directly to customers with lower commission fees, making food cheaper for users. That puts pressure on Zomato and Swiggy’s pricing. 

At the same time, Blinkit (Zomato’s quick-delivery arm) is also competing in the same space, while brands like Domino’s and McDonald’s are focusing on their own delivery apps, cutting out the middleman and offering better deals. These shifts are making it harder for Zomato and Swiggy to hold onto customers and grow profits.

With all this, keeping costs under control has become just as important as growing revenue.

Quick Commerce: Big Convenience, Bigger Costs

Quick commerce—delivering groceries and daily essentials in under 10 minutes—has become a key focus for both players. Zomato is scaling up Blinkit, while Swiggy continues to invest in Instamart.

Blinkit and Instamart reported a twofold increase in Gross Order Value (GOV) and revenue in this segment. However, Blinkit outperformed Instamart in both growth and unit economics. 

In terms of fast food delivery, Swiggy’s Bolt service now contributes 12% of its total orders. It has expanded to 500 cities and partnered with over 45,000 restaurants. Meanwhile, Zomato has exited its 10-minute food delivery initiative, allowing Swiggy to experiment and strengthen its presence in this niche space.

Although quick commerce offers strong growth potential, it’s still expensive. Running dark stores, managing stock, and ensuring fast deliveries all add up. Zomato appears to be taking a more measured approach, while Swiggy is pushing harder on innovation. How each company handles this segment could play a big role in shaping its financial future. Source: Economic Times

Customer Loyalty Is Getting Harder to Hold

While people love free delivery and discount offers, they often switch between apps based on the best deal at the time. This makes it difficult for platforms to build lasting loyalty.

To address this, both companies launched subscription plans—Zomato Gold and Swiggy One—offering benefits like free delivery and priority service. However, the results have been mixed. Discounts can attract people, but they don’t always keep them coming back. And when profits are already low, relying too much on offers becomes risky.

What’s Needed to Turn Profits Around?

Making these businesses profitable is possible, but it means changing how they operate. A few things will matter most:

• Focus on high-margin orders, such as bulk meals, premium users, and corporate clients
• Be selective with quick commerce—grow only where it makes sense
• Earn beyond food delivery, through ads, partnerships, and value-added services
• Improve internal processes, from delivery logistics to partner payments.

Zomato has taken steps to manage this by shutting down less profitable projects like “Zomato Instant” and shifting more focus to Blinkit. Swiggy, on the other hand, is still investing in its fast-delivery service, Bolt, and continuing to grow Instamart, even though both are still making losses. Swiggy, while still expanding, may need to pause and prioritise to stay competitive over the long run. 

Analyst Perspectives

Despite profitability pressures, analysts maintain a positive outlook:

Zomato is seen as a strong player, with a favourable rating and a target price around ₹300, supported by Blinkit’s growth and improving performance in the quick commerce space.

Swiggy also has a positive rating and a target price of ₹400. Its steady performance in food delivery, even though its grocery arm continues to lag in efficiency, backs it up.

Swiggy’s revenue is expected to grow by around 63% in the upcoming quarter. However, profitability estimates have been revised downward due to rising competition and the aggressive expansion of dark stores. Net margin forecasts have been adjusted to -18.9% for FY26 and -10% for FY27, down from earlier projections of -11.4% and -5.4%, respectively. Source: Economic Times

Conclusion

Zomato and Swiggy remain leaders in food delivery, but profits are proving harder to achieve. With rising costs, tough competition, and pressure to scale quickly, both must strike a balance between growth and sustainability. Their next moves—especially around cost control and diversification—will shape the future of this fast-changing industry.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.