The sizzler is back on the table – steamy hot and tantalising – much like India’s $55 Bn food delivery market that’s just rolled into the second course of a raging discount war.

From a clash of two titans – Swiggy and Zomato – that together control 90% of the space, the war has evolved into a tripartite conflict. This time, it’s a face-off between the aggregators and state-backed ONDC, which is up for a big bite of the market pie, with restaurants revving up on Rapido to lead the charge.

It was not a sudden flareup, though. The conflict between the Big Two has been simmering for some time with their margins shrinking, and an era of slowed growth kicking off following a sharp decline in user base last year that made deliveries costlier by the day.

Both Swiggy and Zomato attempted everything – from raising commissions and hiking platform fees to bringing in surge fees and increasing delivery fees – in the last couple of years to bump up their margins.

The heat of hikes not only scorched consumer’s money, it also charred the coffers of partner restaurants, who had been clamouring for viable alternatives to end the Swiggy-Zomato duopoly since the last five years.

The entry of ONDC into the ring late in 2022 was a breather, but it fizzled out with the network tapering off the discounts. Food delivery orders on the platform plateaued soon. Industry sources shared with Inc42 that the government has now thrashed out a revival strategy with ONDC, restaurants and top consumer-facing apps to revive the demand and ease the cost load on restaurants.

“We had written to the commerce and MSME ministries, stating that restaurants in the food delivery space needed a bit of support in the form of reasonable incentives,” Anirudha Kotgire and Mandar Lande, the cofounders of Waayu app which has joined ONDC as a restaurant aggregator (seller app), wrote to us.

Sops To Spice Up Food Delivery

Commerce minister Piyush Goyal met various stakeholders in the food delivery space, including ONDC, Paytm’s Vijay Shekhar Sharma, the Ola leadership and some restaurant partners to work around a strategy for reviving the demand without depending on aggregators.

Media reports earlier said that ONDC may offer incentive-based programmes to the seller and buyer apps to jack up the demand. Industry insiders said ONDC has been tasked to dole out the sops under the MSME ministry’s RAMP programme to restaurants on joining the network.

“The government has earmarked INR 200-250 Cr for this incentive programme, but restaurants are also being urged to fund discounts as the network participants (buyer apps) will charge nothing or low commissions from the eateries, compared to what Swiggy and Zomato charge. That is where a lot of ground work has to be done,” one of the sources said, refusing to be identified since it’s still being worked on.

According to the framework, restaurants and cloud kitchens will bear the upfront cost of food packaging and taxes in the beginning, may or........

© Inc42