Zomato vs Swiggy: Who serves up the better investment recipe?

The Zomato vs Swiggy debate has moved from your dinner table to the stock market. With both aggregators now publicly listed, investors face a similar dilemma: Zomato or Swiggy? Which food delivery giant could lead investors to the promised land of wealth and profit?

So, here's our take on how these two stack up against each other. Note that the purpose of this article is not to recommend either company as an investment option, but rather to provide a comparative look at their business fundamentals.

Who delivers more profitably?

If you ask us, neither does. Food aggregators are notorious for consistently operating at a loss, and Zomato and Swiggy are no exception. However, both have made strides in trimming their losses over the past three years. Excluding interest, taxes, depreciation, and amortisation, Zomato's food delivery business was profitable in FY24. Swiggy also narrowed its loss before these costs from Rs 1,410 crore in FY22 to just Rs 47 crore in FY24.

In terms of revenue, Zomato has the lead, with 28 percent annual growth between FY22 and FY24 compared to Swiggy's 17 percent. Zomato also attracts a larger user base, with average monthly users increasing from 15 million to 18 million over this period, while Swiggy's rose from 10 million to 13 million.

Who has cracked the quick commerce code?

Quick commerce is a fast-growing segment and will likely be a major battleground for these delivery giants. Success in this area often depends on the number of dark stores—delivery hubs that enable faster service. As of Q1 FY25, Zomato has a lead with 639 stores to Swiggy's 581. However, Swiggy has allocated 27 percent of its IPO funds, or Rs 1,179 crore, to expand its dark store network, so this lead may be short-lived. Zomato, however, currently generates nearly double the revenue per store, with Rs 2,301 crore compared to Swiggy.

Who uses funds more efficiently?

Both companies are known for burning through cash, and neither has a strong track record in capital allocation. Both have a history of acquiring unprofitable businesses in hopes of scaling up rapidly. Swiggy has made six loss-making acquisitions, the most recent being LYNK Logistics. Before that, it acquired Dineout, Kint, Scootsy, and Supr Daily. Zomato's high-profile acquisition of Blinkit for Rs 4,477 crore in FY23 is well-known, an acquisition that is yet to add to the bottomline. Additionally, it recently acquired PayTM's loss-making ticketing business for Rs 2,048 crore. When it comes to strategic investments, there's no clear winner here.

Final verdict

Zomato may have a slight edge in scale, with a larger user base and higher revenue. However, neither company has shown consistent profitability, making sustainable, long-term wealth creation difficult to predict. As a reminder, this comparison is purely informational; investors should consider whether they're comfortable with the risks involved in betting on companies without a clear path to profitability.

Also read: Zomato's new blood has investors upbeat. Will it be the final game-changer?