Restaurant India News: Swiggy and Zomato Delivery Costs May Rise as Fuel Prices Increase

Rising fuel prices are expected to increase food delivery and quick commerce costs in India, putting pressure on platforms such as Swiggy and Zomato, according to a report by Elara Capital.

The report said average delivery costs currently stand at around Rs 35-50 per order for quick commerce and Rs 55-60 per order for food delivery. Fuel expenses account for nearly 20 percent of delivery costs, translating into an implied fuel cost of approximately Rs 9-10 per order on a blended basis.

Based on the analysis, a 4 percent increase in fuel prices could result in a negative impact of around Rs 0.44 per order. If fuel prices rise further by nearly Rs 10 per litre over the next 3-6 months, the blended impact could increase to nearly Rs 1-1.2 per order.

The report stated, “This impact is likely to be shared partly through customer pass-through, partly absorbed by the platforms and partly reflected in compression of delivery partner economics.”

Higher logistics costs could eventually translate into increased platform fees, delivery charges, or handling costs for consumers as aggregators attempt to protect margins while maintaining order volumes. The report also highlighted the role of electric vehicles and cycle-based deliveries in reducing fuel-linked pressure. According to Elara Capital, if fuel prices rise by Rs 10 per litre, EV and cycle penetration in quick commerce could increase to nearly 30-40 percent, while food delivery could see penetration levels of around 20 percent.

“On a blended basis, we assume that the effective fuel-linked impact would apply to ~70 per cent of total orders. Hence, adjusted for EV/cycle penetration, even in the case of a ~Rs 10/ litre fuel hike, the net EBITDA impact may be closer to ~Rs 1-2 billion, implying only ~ 4-5/10-12 per cent FY27E adjusted EBITDA downgrade for ETERNAL/SWIGGY, respectively. The impact is higher for Swiggy given its lower profitability cushion and ongoing path towards contribution break-even in quick commerce,” the report noted.

The brokerage added that Eternal is currently in a stronger position than Swiggy to manage fuel-related cost inflation due to its larger advertising revenue base and stronger pricing power.

“Elara Capital” said, “Eternal’s customer base is more premium and less price-sensitive, which gives the company a higher propensity to recover cost rise through platform fees, delivery fee optimisation and handling charges across both food delivery and quick commerce. Further, Eternal’s larger scale and stronger ad revenue base provide an additional margin cushion versus Swiggy. In contrast, Swiggy may face a higher impact, given lower profitability cushion in quick commerce and a more sensitive customer base. Hence, while both the platforms have pass-through levers, Eternal’s ability to absorb and recover fuel-led cost inflation is stronger.”

The report comes at a time when India’s food delivery and quick commerce sector is already balancing profitability pressures, aggressive expansion, and rising operational costs amid growing competition.