SUMMARY
The move to shut the brand was reportedly part of Swiggy’s bid to become operationally fitter
The Bowl Company will continue to operate in other cities including Bengaluru, Chennai and Hyderabad
This comes a week after investor Prosus attributed nearly $105 Mn in losses on account of its stake in Swiggy
As losses mount, foodtech giant Swiggy has discontinued its cloud kitchen brand, The Bowl Company, in Delhi-NCR.
The foodtech company tried several different models to run it independently, which didn’t work out, according to an ET report.
Meanwhile, the service will continue to operate in other cities including Bengaluru, Chennai and Hyderabad.
In a statement to Inc42, Swiggy spokesperson said, “The expansion of The Bowl Company in Delhi/NCR was an experiment we ran to bring new food experiences to users. This experiment has led to its due learnings, even as we focus on operational excellence for the brand.”
Swiggy further added, “We will continue to invest and grow The Bowl Company in cities like Bangalore, Chennai and Hyderabad, where the brand is well-loved and growing.”
This comes close on the heels of Prosus releasing its half-yearly report, which attributed nearly $105 Mn in losses to the tech investor owing to its stake in Swiggy.
On A Downward Spiral
The announcement by Swiggy to shutter one of its cloud kitchen brands comes at a time when the startup has been bogged down by controversies and mounting losses.
The biggest concern has been losses which, according to Prosus, stood at around $315 Mn (INR 2,570 Cr) in the first half of the financial year 2022-23 (FY23). However, gross merchandise volume (GMV) of the food delivery arm during H1 FY23 also rose more than 40% year-on-year (YoY) to $1.3 Bn.
Such was the impact of the Prosus report that equity research firm Jefferies publicly stated that Swiggy was fast losing market share to competitor Zomato, despite offering heavy discounts.
Jefferies, in its report, stated that Swiggy’s losses in the first half of FY23 were ‘significantly higher’ compared to Zomato’s standalone loss of $50 Mn (INR 410 Cr) during the period under review.
The Bengaluru-based giant had last reported a loss of INR 1,616.9 Cr in FY21, against a total revenue of INR 2,675.9 Cr during the same period.
Another issue plaguing the company has been multiple fronts opened by restaurant associations against the company over its new offering Swiggy Dineout. The National Restaurant Association of India (NRAI) has been lobbying its partner restaurants to boycott the product citing steep discounts and high commissions charged by the company.
Swiggy along with Zomato is also bearing the brunt of agitating workers. A case in point has been Swiggy’s food delivery executives who have been on strike in Kerala’s Kochi for the past two weeks demanding a hike in their salaries.
The foodtech major is also under the regulatory scanner in an antitrust probe launched by the Competition Commission of India (CCI) into its conduct.
This comes even as rising inflation and increasing fuel prices continue to eat into the margins of the foodtech company. But, while challenges continue to stack ahead, Swiggy continues to be one of the two key players in the Indian foodtech duopoly.
According to Statista, the Indian online food delivery market was pegged at around $2.9 Bn as of 2020. The number is expected to surge to $13 Bn by 2025.
