It is known how difficult times have become for food and hyperlocal delivery startups. While capital is hard to come by, the business models these companies have employed hasn’t found much takers as well. However Swiggy, one of the very few better-performing companies in this domain, has come up with something, rather unheard of in this segment — Surge pricing.
Yup, despite state Governments thrashing down on Uber and Ola as these companies try to earn some decent profits for the quality services they provide, Swiggy has come up with surge pricing in a food ordering segment. This first came to light in Bangalore, and was reported promptly by folks at OfficeChai. Right now, it seems that the surge pricing is applicable for restaurants that had long delivery times. The company claims that the surge prices in delivery enables it to get more delivery executives on the roads.
While cab-hailing service providers pass on the benefits of surge pricing, it is not yet clear if Swiggy will do the same or not — though it does say it will, in a series of tweets. Also, we are not sure if Bangalore is the only city where Swiggy has introduced surge pricing. This could also be a pilot project which may get introduced to other cities as well. We’ve asked the company for a comment and will update this story soon.
Swiggy clearly mentions the surge on its restaurants page. Also, since it gets really difficult to deliver food in adverse conditions like heavy rainfall, massive traffic, etc., the idea of charging additional fees seems appropriate.
The food ordering and delivery is a crowded market and startups in this space are feeling heat from investors. A few months ago, Swiggy increased the minimum order value for free food delivery from Rs.150 to Rs.250 in Bengaluru. For orders less than Rs.250, it charges an additional delivery fee of Rs.30.
Founded by Sriharsha Majety and Nandan Reddy, along with ex-Myntra developer Rahul Jaimini, Swiggy started its operations in August 2014. A couple of months ago, the company had raised $35 million at a valuation of around $100 million. Prior to that, it had raised $16.5 million in a Series B round and $2 million in Series A round from SAIF Partners and Accel.
The company is currently operating in eight cities — Bangalore, Gurgaon, Hyderabad, Delhi, Mumbai, Pune, Kolkata and Chennai — with some 5,000 restaurants on its platform and approaching 1 million orders each month.
Swiggy has been coming up with many new partnerships and solutions to boost revenues and differentiate itself from the rest. It has also announced to set up cloud kitchens, which serves the purpose of preparing food for incoming orders, with no dine-in facilities. Recently, it also announced partnership with BurgerKing and will take care of their logistics for all 23 outlets in India.
