Swiggy has reported a 500% jump in losses as compared to last year as one of the country’s leading food delivery applications ramps up advertisement spends. “The increase in losses is due to a multi-fold increase in advertising expenses, employee expenses and delivery costs,” Anchal Agarwal, founder of Tofler, a Business Intelligence Platform, said in a report on Monday. Further, the company is aiming to swell its user base, “unlike many other startups who focussed on achieving sustainability and controlling costs this financial year,” she added. The Bundl Technologies Private Limited or Swiggy’s net loss stood at Rs 2,346 crore during fiscal 2018-19.
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The online food ordering business has boomed in India with the entry of several platforms such as UberEats, Zomato, Swiggy, among others. In fact, Amazon, one of the largest e-commerce platforms is also expected to start its own food delivery business soon, according to a media report. Considering the potential in the Indian market, Swiggy has been expanding its foothold in India and had earlier said that it has set-up over 1,000 cloud kitchens, for nearly 1.6 lakh restaurants listed on the platform. The company made an investment of more than Rs 175 crore for the same.
Swiggy now looks to further pump Rs 75 crore to increase the number of cloud kitchens in 12 new cities by March 2020, according to Vishal Bhatia, CEO, New Supply, Swiggy. “With the massive growth in online food ordering over the last 2-3 years, India has leapfrogged the widespread in-restaurant dining culture that was prevalent in many international markets,” Vishal Bhatia had earlier said.
Meanwhile, food aggregators including Swiggy have been facing heat from restaurant partners as the National Restaurants Authority of India (NRAI), a body representing over 5,00,000 outlets alleged that platforms like Swiggy and Zomato are unsustainable for restaurants. Thousands of cafes and restaurants pan-India then joined the logout campaign stating that the deep discounts offered on the platforms were causing huge losses to restaurants.