Food Delivery Apps

How platforms like Swiggy, Zomato and Uber Eats connect restaurants, riders and customers, and the debates over commissions and rider pay.

Food delivery apps have changed how people eat. In India, Swiggy and Zomato dominate the market. Globally, companies such as Uber Eats, DoorDash and Meituan serve millions of orders a day.

A three-sided platform

Food delivery apps connect three groups:

Customers, who want convenient food.
Restaurants, which want more orders.
Delivery riders, usually independent gig workers paid per delivery.

The app earns money from commissions charged to restaurants, often a significant percentage of each order, plus delivery fees and other charges paid by customers.

Effects on restaurants

Apps give restaurants access to many more customers without needing more seating. But commissions can take a large share of each order, squeezing thin margins. Restaurants may raise menu prices on apps compared with dine-in prices. Some restaurant associations have complained about high commissions and apps promoting their own brands or favoured partners. The Competition Commission of India has investigated complaints about delivery platforms’ practices.

Cloud kitchens

Apps have fuelled cloud kitchens, also called dark kitchens: kitchens that serve only delivery orders, with no dining room. They save on rent and can run several virtual brands from one kitchen.

Riders

Delivery riders value flexible work but often face low and unpredictable pay, pressure to deliver fast, road safety risks and little social protection. India’s Code on Social Security, 2020, recognised gig and platform workers, and states such as Rajasthan and Karnataka have passed laws to create welfare boards funded partly by platform fees.

Where the order money goes

A customer orders a meal worth 400 rupees plus a delivery fee. The restaurant pays the app a commission of perhaps a fifth or more of the food value. The rider earns a fee for the trip, sometimes with incentives for completing many orders. The app keeps the rest to cover technology, marketing, customer support and, it hopes, profit. For years, many delivery apps lost money as they competed for market share.

The business model

Food delivery apps long struggled to make profits, spending heavily on discounts and marketing. In recent years, leading companies in several markets, including Zomato, now called Eternal, have reported profits by raising fees, cutting discounts and expanding into related services like quick grocery delivery.

Thinking delivery apps make food cheaper

Apps make food more convenient, but ordering through them usually costs more than eating in or collecting, because of commissions, delivery fees, packaging and higher app prices. Customers pay for convenience.

Key takeaways

Food delivery apps connect customers, restaurants and delivery riders.
They earn commissions from restaurants and fees from customers.
Apps widen restaurants' reach but squeeze margins; cloud kitchens serve delivery only.
Rider pay and protection are debated, and India has begun recognising gig workers in law.