Consumers ordering from popular food and quick commerce platforms like Swiggy and Zomato may soon face higher costs. A recent report by Elara Capital indicates that escalating fuel prices are set to drive up the overall pricing of delivery orders across India.
Fuel Hikes Impact Delivery Economics
The report estimates that the average delivery cost currently ranges from ₹35-50 per order for quick commerce and ₹55-60 for food delivery. With fuel accounting for approximately 20 percent of these delivery costs, even a modest 4 percent increase in fuel prices could translate to an additional ₹0.44 per order on a blended basis.
Should fuel prices surge by ₹10 per litre in the coming 3-6 months, the per-order impact could escalate to ₹1-1.2. This increased burden is likely to be distributed among customers through higher fees, absorbed partially by the platforms, and could also lead to a compression of earnings for delivery partners.
Role of Electric Vehicles and Platform Resilience
One mitigating factor could be the increasing penetration of electric vehicles (EVs) and cycles. Elara Capital suggests that if fuel prices rise by ₹10 per litre, EV and cycle adoption could reach 30-40 percent in quick commerce and around 20 percent in food delivery. Accounting for this, the effective fuel-linked impact would apply to about 70 percent of total orders.
Even with EV adoption, a ₹10/litre fuel hike could still result in a net EBITDA impact of ₹1-2 billion for these platforms. This translates to an estimated 4-5 percent and 10-12 percent downgrade in FY27E adjusted EBITDA for Zomato (referred to as Eternal in the report) and Swiggy, respectively.
Zomato Better Positioned to Absorb Costs
The report highlights that Zomato is better equipped than Swiggy to manage these fuel-led cost pressures. This is attributed to Zomato's stronger ability to pass on costs to customers and its higher scale of advertising revenue. Zomato's customer base is perceived as more premium and less price-sensitive, allowing the company greater flexibility to recover rising costs through platform fees, optimized delivery charges, and handling fees across both its food delivery and quick commerce segments.
In contrast, Swiggy may face a more significant impact due to its lower profitability cushion in quick commerce and a more price-sensitive customer base. While both platforms possess mechanisms to pass on costs, Zomato's overall capacity to absorb and recover fuel-led inflation appears stronger.