Rapido, the rising star in ride-hailing services, is actively pursuing a partnership with the National Restaurant Association of India (NRAI) to dive into the food delivery sector. This collaboration could be a game-changer in a market currently ruled by Swiggy and Zomato, which dominate a whopping 95% of the space. The NRAI, representing over 500,000 restaurants nationwide, has been advocating for a reliable “third player” to disrupt this duopoly.

Navigating the Restaurant Landscape

In January, the NRAI explored opportunities to onboard its member restaurants onto the Open Network for Digital Commerce (ONDC). This government initiative aims to reshape the digital commerce landscape, but a sustainable business model remains elusive.

Pranav M Rungta, NRAI’s vice president, emphasized the need for a balanced ecosystem: “We’re still working on a model where everyone benefits, from buyer and seller onboarding apps to aggregators and our restaurant partners.”

Innovative Business Models

Rapido has put forth two potential models in its discussions. The first aims to significantly reduce the existing commission rates, currently ranging from 35-45%, while the second proposes a subscription-based approach that completely eliminates commissions. This zero-commission model reflects Rapido’s successful transition to a subscription strategy in its autorickshaw and cab services last year, allowing the company to achieve over $1 billion in gross merchandise value.

Rungta pointed out that larger restaurant chains might prefer the subscription model due to their lesser need for promotional discovery. In contrast, smaller establishments could benefit from lower commission rates but will need to optimize their advertising efforts. “Both models present intriguing advantages,” he noted.

Rapido’s Food Delivery Experience

Rapido has a background in food delivery, utilizing its bike-taxi riders to fulfill orders for Swiggy, which is also an investor in the company. Additionally, Rapido has collaborated with ONDC to further expand its reach. Interestingly, sources indicate that while Rapido’s agreement with Swiggy doesn’t restrict its entry into food delivery, it does prevent the company from offering fleet services to Zomato.

Addressing Market Challenges

This strategic move comes at a critical time as the ONDC’s food and beverage category has seen a 10% decline in orders month-over-month, totaling 1.4 million in February. The NRAI has raised concerns about Swiggy and Zomato launching their own cloud kitchen brands, Snacc and Bistro, respectively, citing potential conflicts of interest regarding data usage.

Conclusion

As Rapido seeks to carve out a niche in the competitive food delivery market, its discussions with the NRAI could pave the way for innovative solutions that benefit both restaurants and consumers. With a focus on redefining commission structures and leveraging existing capabilities, Rapido is poised to challenge the status quo and provide a fresh alternative in the food delivery landscape.