Fuel price hike may create near-term pressure on food and quick commerce deliveries: Report
New Delhi, May 20
Rising fuel prices could create a near-term cost pressure for food delivery and quick commerce platforms such as Eternal and Swiggy, though the overall impact is expected to remain manageable, according to a report by Elara Capital.
The report stated that the recent fuel price hike of around Rs 4 per litre has increased petrol and diesel prices by nearly 4 per cent amid geopolitical tensions and elevated crude oil prices.
According to Elara Capital, even if gig workers seek higher payouts due to the increase in fuel prices, the impact on the companies' earnings is likely to remain under control in the near term.
It stated, "Any increase in fuel cost can directly impact delivery economics by lowering delivery partner yields and potentially increasing the risk of payout-related pressure."
Elara Capital estimated that the average delivery cost stands at around Rs 35-50 per order for quick commerce and Rs 55-60 per order for food delivery.
On a blended basis, the average delivery cost is estimated at around Rs 45 per order for Eternal and around Rs 55 per order for Swiggy.
Assuming fuel accounts for nearly 20 per cent of delivery costs, the implied fuel cost per order comes to around Rs 9-10 on a blended basis.
The report estimated that the current 4 per cent fuel price increase would have a negative impact of around Rs 0.44 per order.
But the report noted that under a worst-case scenario, if fuel prices rise further from the current Rs 4 per litre hike to nearly around Rs 10 per litre in the coming months, the per-order impact could increase to around Rs 1-1.2 per order.
This could translate into around 4-5 per cent impact on FY27 adjusted EBITDA for Eternal and nearly 10-12 per cent impact for Swiggy, assuming there is no pass-through of costs to customers.
Elara Capital said the impact is expected to be higher for Swiggy as the company is still working towards contribution break-even in quick commerce.
On the other hand, Eternal is seen to be in a relatively stronger position due to its larger scale, higher advertising revenue base and better ability to recover costs from a more premium and less price-sensitive customer base.
The report highlighted that on an annualised FY27 estimate basis, Eternal and Swiggy are expected to handle nearly 2.7 billion and 1.4 billion orders respectively across food delivery and quick commerce platforms.
According to the report, this additional burden is likely to be shared partly through higher customer charges, partly absorbed by the platforms and partly reflected through pressure on delivery partner economics.
— ANI
Reader Comments
Interesting analysis from Elara Capital. It's good to see they're factoring in delivery partner economics. The real question is: will Zomato and Swiggy pass on costs to customers or squeeze the gig workers? In a country where every rupee matters, a Rs 1-1.2 per order impact could add up. I hope these companies absorb some of the hit rather than making delivery partners suffer.
As someone who orders food online frequently, this is concerning. But let's be honest—fuel prices keep rising and we've become used to it. The bigger issue is the impact on delivery partners who already work for thin margins. Rs 9-10 fuel cost per order is significant for them. Companies should think long-term: invest in electric vehicles or better fuel efficiency for delivery fleets. That would help everyone! ♻️
A thoughtful piece, but I think the report underestimates the cascading effect. Fuel price hikes don't just affect delivery—they increase raw material costs, packaging costs, and ultimately consumer prices. A Rs 0.44 impact per order today could become Rs 2-3 once you factor in the ripple effect. The Indian consumer is price-sensitive, and platforms like Swiggy might see order volumes drop if costs are passed on. Zomato (Eternal) with its premium customer base might weather it better, but still, these are warning signs.
Honestly, I'm tired of these fuel price hikes every few months. 😤 The government should step in and reduce taxes on petrol and diesel instead of letting companies pass costs to consumers. Delivery partners are already underpaid, and now they'll bear more pressure. I'd rather cook at home than pay extra for convenience. Sab kuch mehanga ho raha hai! (Everything is becoming expensive!)
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