Is quick commerce eating into the food delivery market?

The food aggregator suggested that “competition from the rapid delivery of packaged food through quick commerce platforms might be leading to a drop in demand for food delivery from restaurants.” 

The company also pointed to a broader slowdown in consumer expenditures, which could potentially encourage more at-home dining rather than ordering in. To be sure, overall competition in the quick commerce space has accelerated over the last 12 months.

Apart from quick delivery platforms—which offer everything from frozen foods to vegetables and beverages—companies have also rolled out quick food delivery services such as Zepto Cafe and Swiggy Snacc, which deliver items such as coffee, tea, garlic bread, toast and sandwiches. Zomato’s Blinkit also offers Bistro—snacks and meals delivered in a few minutes.

As a result, consumers today have more choices between packaged snacks, meals, and ingredients for food they wish to prepare at home.

Competition aside, Eternal’s management also attributed the slowdown in food delivery during the quarter to a temporary shortage of delivery partners stemming from the expanding quick commerce sector. During the quarter, it also de-listed 19,000 restaurants citing hygiene and operational lapses.

Restaurants and packaged food brands Mint spoke to suggested that quick commerce platforms might be capturing some snacking and last-minute food orders.

“We’re seeing that quick commerce is definitely capturing more snacking and convenience-driven occasions, which may overlap with some smaller food delivery orders. But for full meals and non-time sensitive orders, especially lunch and dinner, restaurant delivery continues to hold strong despite some downward pressures that seem to be cyclical,” said Zorawar Kalra, founder and managing director, Massive Restaurants Pvt. Ltd. 

Online food delivery market

Kalra operates fine-dine restaurants and cloud kitchens that offer burgers.

India’s online food delivery market accounted for 11% of the total food services market in 2023 and is projected to reach $17-21 billion in FY28, per estimates by Jefferies. However, the market has become more competitive.

The demand for speed and convenience has driven companies to introduce more services recently.

For example, the 10-15 minute food delivery segment has gained momentum in recent months with players like Zepto Cafe, Swiggy Snacc, and Zomato’s Bistro; consumer platforms such as Magicpin, Ola, and Rebel Foods (EatSure QuickiES) have also entered this space. 

These operators either use their dark stores or partner select restaurants to deliver food in minutes.

Consumers can also use Zepto and Blinkit to order ice cream, beverages, and snacks, which they may have ordered earlier through food delivery apps.

In the March quarter, Eternal’s food delivery business reported a 16% year-on-year growth in gross order value with a steady increase in margins. On Thursday, however, the company announced plans to discontinue its ultra-fast food delivery Zomato Quick, citing unfavourable economics for the business.

Jasper Reid, founder of Dolomite Restaurants Pvt. Ltd, which owns Jamie’s Pizzeria and other chains, said the slowdown in food delivery could be tied to weak consumer confidence amid persistent inflation, rising prices, job concerns, and the high cost of capital.

“It’s also possible that consumers are scrutinising their spending on quick commerce and then cutting back on restaurant deliveries. I often hear people say they’re surprised by how much they end up spending on q-commerce—it’s just so easy to order. But then they pull back. Q-commerce food tends to serve different occasions and leans more towards quick service restaurants, while casual dining is typically a different proposition,” he said.

Delivery business

Reid added that delivery remains a tricky business for restaurants. “Much of it depends on cheap labour riding around on heavily polluted roads and working long hours. I’m not at all sure their interests are being protected. It’s a business model that is fundamentally hard to make profitable.”

Other packaged food brands said greater competition within the food delivery segment means consumers will shift between apps. 

“Quick commerce platforms like Snack by Instamart and Zepto Cafe by Zepto have started offering ready-to-eat snacks and meals, and that’s changing how consumers think about convenience. While restaurant delivery is still the go-to for more elaborate or indulgent meals, these quick commerce offerings are beginning to chip away at demand for more casual or everyday orders,” said Sneh Jain, co-founder and managing director of The Baker’s Dozen. The brand sells bakery products across quick commerce platforms.

Consumers use quick commerce more as a shelf-filling solution, purchasing snacks or basic ingredients to stock up their pantry, rather than as a direct alternative to ordering food, she added. “Where we do see potential for overlap is when quick commerce platforms begin offering ready-to-eat dishes, products that can be consumed directly without any preparation. That’s where some shift in consumer behaviour might occur, but it’s still in its early stages,” she said.

Food delivery has seen a slowdown due to its perils, such as high platform fees and delivery charges, which have hampered the frequency of ordering, coupled with severe rider stress, said Sagar J. Daryani, president of the National Restaurant Association of India (NRAI) and co-founder of quick service chain Wow! Momo. 

“Whilst delivery has eaten up 1 out of 10 eating out occasions in the Indian context, we feel consumers are returning to on-premise dining for social experience again. As per my analysis, Q1 and Q2 will maybe set this stage of comeback, and it’s only in Q3 that the numbers for both dining in and delivery would come out to be significantly better,” he said.

Meanwhile, iD Fresh Food, which sells packaged idli and dosa batter, said quick-commerce has made fresh, ready-to-cook meals accessible quickly.

“There is a growing preference for fresh, trusted, hygienic food that can be consumed at the comfort of home by adding their final touch. The company has seen a steady increase of consumer penetration on q-com,” said Rajat Diwaker, CEO India, iD Fresh Food.

Key takeaways 

1. The growth of quick commerce platforms offering rapid food deliveries contributes to a slowdown in traditional food delivery services.
2. Customers increasingly order packaged foods, snacks, and ready-to-eat meals through quick commerce apps instead of restaurants.
3. New players like Zepto Cafe, Swiggy Snacc, and Zomato’s Bistro offer quick meals, intensifying competition in the food delivery market.
4. Rising prices, inflation, and job concerns are affecting consumer spending, leading to fewer restaurant delivery orders.
5. While quick commerce is growing, restaurant food delivery remains strong for full meals, and a potential rebound in dining trends is expected.