Petrol prices surge, ordering food from Swiggy-Zomato may get expensive!

Due to rising fuel prices, everything is becoming expensive, now the users of food delivery apps may also get a shock soon. Recently, a report by Elara Capital stated that rising fuel prices may create cost pressure on food delivery and quick commerce platforms like Zomato and Swiggy in the future, 

but overall its impact is expected to be manageable. The report said that amid geopolitical tensions and rising crude oil prices, the recent increase in fuel prices by about Rs 4 per liter has led to an increase in petrol and diesel prices by about 4 percent.

Fuel prices can affect delivery costs

According to Elara Capital, even if gig workers demand higher payments due to rising fuel prices, the impact on companies' earnings is likely to remain contained. 

It states that any increase in fuel costs could directly impact delivery economics by increasing the risk of payment pressures. 

According to the report, this additional burden may be partially passed on to customers through higher customer charges, while the company may absorb some of the costs itself.

Elara Capital estimates the average delivery cost to be around ₹35-50 per order for Quick Commerce and ₹55-60 per order for Food Delivery. Overall, the average delivery cost for Zomato is estimated to be around ₹45 per order and for Swiggy around ₹55 per order.

How much does the fuel cost per order?

Assuming fuel accounts for approximately 20% of delivery costs, the fuel cost per order comes to approximately ₹9-10. The report estimates that the current 4% increase in fuel prices will have a negative impact of approximately ₹0.44 per order.

The report states that in a worst-case scenario, if fuel prices increase from the current ₹4 per liter to approximately ₹10 per liter in the coming months, the impact on each order could increase to approximately ₹1-1.2 per order. 

This could impact FY27 adjusted EBITDA by approximately 4-5% for Eternal and approximately 10-12% for Swiggy.