Indian online food ordering and delivery setup have started with two companies called Swiggy and Zomato. Both these companies have made their own strategies and have seen success and failure in their course of business.
Though they have seen a decline because of COVID-19, they made a successful comeback in their own ways. The article focuses on business operations and the developments in their revenue streams in FY22.
Sale proceeds from food, advertisement, subscription, delivery, and all are the sources of revenue for both Zomato and Swiggy. The online platform of these companies facilitates partner restaurants to organize food ordering and delivery, they connect the consumers, restaurants and delivery personnel using their website platform and mobile application.
Both companies made most of their operating revenue from food delivery. The sale proceeds from this service is INR 3651 crores for Zomato and it was INR 3444 crores for Swiggy during FY22.
The total revenue of Zomato also includes its B2B unit HyperPure, a farm-to-fork supplier to restaurants in India, and the revenue from this unit was INR 541 crore during the year.
Swiggy’s revenue from the sale of Grocery, FMCG, and other products including a few of its private labels accounted for INR 2123 crores.
In order to compete with Swiggy, Zomato acquired Blinkit and these numbers will be seen in the coming FY. With these, both the giants are into q-commerce as well.
The total revenue of Zomato in FY22 was around INR 4687 crores which include INR 495 crores from non-operating revenue and the total revenue of Swiggy was INR 6120 crores which comprise of INR 415 crores from few other sources and considered as non-operating income.
On the cost sheet of both companies, outsourcing support costs including delivery and manpower-related charges was the largest cost center. Zomato spent INR 1986.4 crores and Swiggy spent INR 2350 crores during FY22.
On employee benefits, both the companies spent around INR 1633 crores and INR 1708 crores respectively.
The cost of procurement of materials reached new heights for both companies. The cost was around INR 524.6 crores for Zomato and INR 2268 crores for Swiggy in FY22. The high cost of procurement of Swiggy can be attributed to its business unit Instamart.
Zomato has incurred INR 1217 crores on its promotions and another INR 289 crores on its IT and Communications cost. At the same time, Swiggy has spent INR 1849 crores on promotions and INR 330 crores on its IT and Communications costs. All these expenses took the total expenditure of Zomato and Swiggy to INR 6205 crores and INR 9574 crores respectively.
Zomato and Swiggy’s losses spiked 49.8% and 124.4% respectively to Rs 1,222 crore and Rs 3,629 crore during FY22 as opposed to Rs 816 crore and Rs 1,617 crore in FY21. Moreover, the outstanding losses of both of the entities climbed to Rs 6,726 crore (Zomato) and Rs 22,880 crore (Swiggy) at the end of FY22.
As per the financial analysis, Zomato had to spend INR 1.48 for every INR 1 they earned. At the same time, Swiggy has spent INR 1.68 to generate a revenue of INR 1. The financial ratio EBITDA of Zomato and Swiggy are at -28.92% and -52.88% respectively.