Swiggy’s CEO Announces Profitability of Food Delivery Business
- ByStartupStory | May 18, 2023
Swiggy, a homegrown food aggregator, achieved profitability in March, enabling food tech platforms to overcome their longstanding challenges with high operating costs and move towards profitability.
In a blog post on Thursday, Sriharsha Majety, the CEO and founder of Swiggy, stated that the company’s profitability was attained through a combination of innovation and effective execution. He emphasized that the profitability calculation considered all corporate costs except employee stock options.
“We have reached this milestone while bringing tremendous benefits to all partners in our ecosystem. Our core value that the customer comes first has consistently been reciprocated with deep consumer love and industry-best NPS scores, repeat and retention rates. We continue to make strides in gaining customer favour, including strong traction in tier 2 and 3 markets. Our teams are more in sync than ever with restaurant partners to improve their experience with Swiggy and create mutual wins. As a result, our restaurant NPS has improved by over 100% in the past eight quarters,” Majety said.
According to Sriharsha Majety, the CEO and founder of Swiggy, India’s eating out and food delivery trend is still in its early stages, indicating significant growth potential in the next two decades. Swiggy is highly optimistic about this prospect.
Additionally, the company has achieved notable advancements in the profitability of its quick-commerce business, specifically Instamart. “We’re on track to hit contribution neutrality for this three-year-old business in the next few weeks,” he said.
In 2014, Swiggy entered the food delivery landscape when Sriharsha Majety, Nandan Reddy, and Rahul Jain, three friends, made the decision to launch the service. Despite the widespread popularity of online food ordering, the industry’s economic feasibility has been questioned by many, as noted by Majety.
In the online food delivery market of India, Swiggy and Zomato hold a dominant position.
In the previous year, Swiggy made an acquisition of Dineout, which has now emerged as the leading player in the dining out segment. With a network of over 21,000 restaurant partners spanning across 34 cities, Dineout has established a strong presence.
Swiggy’s strategy for driving future growth in the food delivery sector involves making responsible and measured interventions. The company aims to target underserved geographic and consumer segments by investing in the appropriate strategies to outperform industry growth.
“As our investments in food delivery are starting to pay off successfully , we’re also very excited about the trajectory of our quick commerce business, Instamart…Instamart is one of the leading players in the quick commerce space globally. In addition, we’ve also made strong progress on the profitability of the business and we’re on track to hit contribution neutrality for this three-year-old business in the next few weeks,” Majety said.
Shortly after US-based fund manager Invesco reduced Swiggy’s valuation from $8.2 billion to $5.5 billion, news emerged regarding the company’s food delivery business achieving profitability.
In January, Swiggy had to downsize its workforce by letting go of 380 employees due to challenging macroeconomic conditions and a slowdown in the growth of its food delivery business. Additionally, the company took measures to shut down underperforming verticals as part of cost-cutting initiatives.
Startups, in general, have been compelled to reassess their cash burn and employee expenses due to a funding slowdown that has made it challenging to secure new investments. According to an earlier report by Mint, startup deal volume in India hit a nearly nine-year low in February.
Majety expressed confidence that Swiggy will achieve further milestones in the upcoming quarters.
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