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Zomato Vs. Swiggy: Who is in the Best Place to Win Hunger Games?

With the revival of food delivery, Zomato and Swiggy are looking to capitalize on and adopt different strategies to conquer t

Online food ordering platform, Swiggy is in advanced talks to close a 700 to 800 million USD funding round led by Qatar Investment Authority, sovereign wealth fund, participation from Singapore’s GIC, and Falcon Edge, a global alternative asset manager, according to an ET report (1).

According to sources, if successful, the Bengaluru-based food tech startup can raise its valuation to about five billion USD. Post-money valuation also includes the primary capital the company secured in the present financing round.

Notably, Swiggy had closed its previous funding at more than a 3.6 billion USD valuation when it secured 158 million USD (2) led by its most significant backer Naspers in February 2020.

Several reports suggest that the food delivery giant is raising the fund to compete against Zomato’s upcoming Initial Public Offering. Notably, the COVID-19 crisis was a major hit for these companies as their cash income was at an all-time low. However, they started recovering post the lockdown, and since then, Swiggy has been significantly scaling its business in terms of profitability and cash flow. In a statement, Swiggy mentions that it would keep scaling its business and grow via investment strategies.

According to reports, Swiggy could be building a war chest for Zomato’s upcoming IPO.

The War Chest Worth One Billion

Swiggy’s fundraise came when its main rival Zomato is expected to go public in the upcoming few months.

According to the ET report, this week (3), the Gurugram based Zomato has restructured its capital base and aims to create 8.8 billion new shares. Other reports suggest that on January 21, the restaurant discovery and food delivery app finalized a 500 million USD pre-IPO round.

It would value the company about 5.5 billion USD and has mandated investment banks Goldbank Sachs, Credit Suisse, Kotak Mahindra Bank, and Morgan Stanley to manage the issue.

According to sources, the latest investment round would help Swiggy’ build a war chest of a little under 1 billion USD.’

Swiggy’s top executives estimate that the company’s food ordering business would post a full recovery in GMV, gross merchandise value in the first quarter of the financial year 2021. They added that its other businesses, such as hyperlocal deliveries, are also expanding amid the COVID-19 crisis.

Moreover, the company has turned more capital efficient, cutting back on discounts, and looking for a better fit with restaurants that witnessed a massive disruption in their dine-in businesses because of the pandemic, stated top executives.

In a panel discussion with ET in the previous month, the CEO of Swiggy, Sriharsha Majety (4), stated that the need for cash has come down meaningfully. They have accelerated the profitability of the food delivery business significantly. Moreover, they would keep chipping away and invest in their other new initiatives.

Like the e-commerce business, the online food ordering platform also witnessed a massive upheaval when India announced its nation-wide lockdown at the end of March 2020. And since the government had declared food delivery as an essential service, players such as Zomato and Swiggy could keep their business running.

However, both companies faced severe disruption in the services during the early lockdown weeks because of the restaurants’ closure and changes in local regulations. In September 2020, Zomato stated that its food ordering business had recovered 85% in gross merchandise value terms to pre-pandemic levels.

It is worth highlighting that by the end of 2020, both Zomato and Swiggy reported a robust surge in demand (5). Both firms stated that they had observed the highest daily orders on December 31, bolstering restaurants that otherwise see a slump in dine-in customers because of local curfews implemented in several states.

The CEO of Zomato, Deepinder Goyal (5), stated that the company witnessed a huge jump in sales, 60% higher than the last New Year’s Eve.

Notably, both firms would have to increase their spending for delivery partners next year with the new social security code for gig workers coming into effect. They would have to allocate either 1% of their profit or 5% of the wage bill for their workers’ quarterly or monthly contributions to a PF, provident fund for workers (6).

The Battle for Market Leadership

Zomato and Swiggy, both food tech unicorns, are fighting it out for market leadership. The former is en route to an IPO, initial public offering sometime in 2021, marking the first public market outing for India’s food delivery firm (7).

Presently, Swiggy has a marginal leader over Zomato in the pure-play food delivery business, as per the companies’ earnings reports for the fiscal year 2019-2020.

Swiggy revenue

The standalone revenue from the Bengaluru-based firm’s operations grew 124% to 2,515.4 crore INR in the financial year 2020. Meanwhile, the revenue of Zomato stood at 2,336 crore INR for the year, doubling from 1,163 crore INR in the previous financial year.

zomato revenue

The food delivery segment continues to be a high capital burn business if we talk about spends. The expenses of Swiggy have nearly doubled this year to 6,545 crore INR from 3,637.6 in the previous financial year. Notably, it spent about 1,034 crore INR on promotions and advertising, up from 776.2 crore INR, while its employee costs increased to 1,087.8 crore INR from 537.2 crore INR.

Inevitably, the operator of Swiggy, Bundl Technologies (8), incurred 3,768.5 crore INR losses for 2019-2020. Up 60% from 2,345.6 crore INR in the last fiscal.

On the other hand, the losses of Zomator widened more than 2.5x times to 2,451 crore INR during the financial year from 940.4 crore INR in the previous fiscal year. The financial year spent about 621 crore INR on employee benefit, up from 467 crore INR in the previous financial year 2019. Meanwhile, its advertising promotion increased marginally to 1,326.6 crore INR from 1,218.2 crore INR (9).

operation revenue breakup

The service income and commissions from restaurants contributed 59%, about 1,490.7 crore INR, to Swiggy’s operating revenue. Whereas its delivery fees collection from customers accounted for 22% or 544.1 crore INR and advertising revenue contributed 7% with 179.7 crore INR.

Zomato, a Gurugram-based food delivery startup, generates its primary revenue from advertisements, food delivery, online ordering, and Zomato Gold, its subscription offering. The firm witnessed its income from its provision and food delivery services grow nearly 13-fold to 206.3 crore INR in the current financial year.

It also witnessed a significant increase in revenues from the sale of services such as advertising, sign up, subscription, and commission, increasing to 2,112.4 crore INR from 1,134.6 crore INR, accounting for 90% of its operating revenue.

Subsidiaries of Swiggy and Zomato

Zomato runs about 35 subsidiaries via its international business units and acquisitions (10). It recorded consolidated operating revenue of 2,605 crore INR in the financial year 2020, up by 98% from 1,312.5 crore INR. Its consolidated losses stood at 2,385.6 crore INR, up by 138% from 1,001 crore INR in the financial year 2019.

It is also worth highlighting that India makes up about 90% of Zomato’s revenue, 2,099 crore INR, and the remainder from the UAE market, about 237.2 crore INR.

In the financial year 2020, Zomato had sold its entire stake in Loyal Hospitality, a Bengaluru-based startup offering kitchens to restaurants for about 33 crore INR in February last year. Notably, it had invested about 30 crore INR in the company in 2018.

In the current year, Zomato also closed its non-operational subsidiaries in Romania, Norway, and Austria. Simultaneously, the company also acquired Uber’s food delivery business, Uber Eats in India, in a cash and stock transaction with a valuation of more than 1,376 crore INR.

In September, Deepinder Goyal, the co-founder, and CEO of Zomato told employees that the company expects to launch an IPO by mid-2021. In January, the company clocked a 660 million USD pre-IPO round. Since its inception in 2008, the firm has secured more than 1.2 billion USD funds across multiple rounds.

Meanwhile, Swiggy impaired its entire investment, about 102.3 crore INR, in Scootsy, Ant Farm incubated hyperlocal delivery venture, which it acquired for 37 crore INR in 2018. It delivered food, fashion apparel, accessories, home decor, and more in Mumbai. Swiggy infused 33 crore INR during the financial year 2019 and 32 crore INR more during the current fiscal after the acquisition. However, its losses grew to 240 crore INR from 206.8 crore INR in the previous financial year.

Swiggy’s, another 100% subsidiary, SuprDaily, a milk delivery startup, reported a 272.2 crore INR loss in the financial year 2020.

Swiggy had acquired SuprDaily in September 2019 for 51.5 crore INR, and as of March 31, 2020, the company assessed the investment carrying value at 333.5 crore INR for impairment. However, according to the future operational plan, projected cash flows, and valuation carried out via an external auditor, it chose to carry its balance sheet value.

Swiggy has also classified Maverix Platform, owner of Fingerflix, as its associate company, with 27% holdings in the company (11).

It is also worth highlighting that Swiggy added more than one lakh restaurants and an active delivery fleet of more than two lakhs during the year. The company stated that it had launched its operations in 405 new cities to widen its reach across India.

According to its filings, its contribution margin per order has also improved by 73% year-on-year. In April 2020, it had secured 43 million USD amid the COVID-19 crisis. Its last major filing was in February 2020 when Prosus, an investment arm of Naspers, the South African internet and media conglomerate, Meituan-Dianping and Wellington Management, poured in about 112.5 million USD into the firm.

Previously, the company had received 1 billion USD at a 3.3 billion USD valuation in a funding round led by Naspers in 2018.

Strategies Adoption


Both Swiggy and Zomato have secured a large sum of money to reach as many people as people possible with a simple premise, Scale.

Both food delivery unicorns have made big investments in human resources and technology to fulfill orders that usually require about a couple of hundred bucks.

Since the food delivery business is a number game, one has to serve as many customers as he can to be financially viable. The more the customers, the better are the chances for the one to become profitable. And both firms, Zomato and Swiggy, have spent crazy money and have adopted different marketing strategies to lure potential customers with enticing discounts for far too long now.

Zomato knows what to put out there to their audience with the main motive as food. They have successfully passed the message related to food through different content such as video sharing and creative images. Zomato has so far managed to keep its audience entertained and engaged through different social mediums, making it their biggest strategy.

The game-changer for Zomato has been Youtuber-Ads, always leaving a longer than expected impact.

The company is quite aggressive with its offers, especially for First Order. It knows how to market its offers to its users via marketing across social media platforms, YouTube, and pushing the Google Search Ads.

The company is also nailing it when it comes to social media engagement, and only a number of brands have been able to do it the way Zomato does. It seems like the company knows what clicks with the audience.

One can see how Zomato market itself, and there is many other such witty and humorous content they come up with.


If we observe, we would know that Swiggy has become the name in all of our heads because of its digital advertisement through several digital channels. If not anything, we can’t forget its non-skippable bumper ad on YouTube when we go there to watch our videos since it knows how to advertise.

The company has mastered bringing the food to the customers instead of bringing them to the restaurants for food. It does text ads, video ads, display ads, and social media support to get branding and become successful.

The marketing strategy of Swiggy consists of both online and offline marketing campaigns. It has now become a reputed brand because of its quality service and excellent social media strategy. Every Swiggy campaign is remarkable since they are very engaging and interactive.

Swiggy promotes its campaigns with Facebook, Pinterest, Twitter, YouTube, and Instagram. Their posts are light, good quality, and appealing based on humor.

Swiggy also proves the discount numbers, awards, and recognition to create brand loyalty among its customers (12).

Authors’ Note

Both companies have set their eyes on achieving a path to profitability. However, it is clear that they adapt to very different strategies to get to their final milestone.

So, what can we make of the food delivery ecosystem in India? And, who is in the best place to win the war? Share your thoughts in the comments!