Company Outsider: The 10-minute miracle costing Zomato and Swiggy a fortune

In its Q3 FY25 (October-December 2025) earnings, Zomato reported a sharp 57% drop in net profit to just ₹59 crore thanks to Blinkit, its quick-commerce arm whose net loss increased significantly to ₹103 crore. Meanwhile, Blinkit’s gross order value more than doubled in the quarter, jumping 120% year-on-year, even though those orders are only magnifying the bleeding.

Swiggy is doing the same, only with a bigger bill. In Q3 FY25, its consolidated revenue surged by 31% to ₹3,993 crore, but the net loss widened to ₹799 crore. The culprit once again is Instamart, Swiggy’s grocery arm, which saw its contribution margin slip further into the red, as the company expanded aggressively into more dark stores. The message is clear: the more Instamart grows, the more it drags down Swiggy’s overall economics.

Yet, neither of them is slowing down. In the last two quarters, Blinkit added 368 new stores and nearly 1.3 million sq ft of warehousing space. According to CEO Albinder Dhindsa, the company plans to expand its dark store network to 3,000 by March 2027, nearly doubling its footprint.

This is a big bet that stems from the fact that food delivery — Zomato's and Swiggy’s original bread and butter — is maturing rapidly. Swiggy’s food delivery gross order value in Q3 was up 19.2% year-on-year, but the quarter-on-quarter growth slowed significantly. In other words, the cash cow has stopped growing like it used to.

Rather than tighten up, trim costs, or experiment with less capital-hungry expansion, both platforms are choosing to pour billions into a business that is, as per their own earnings, deeply unprofitable. That optimism is further reflected in their push to build out dark stores aggressively. The concept of dark stores traces its origins back to the early 2000s in the UK, where grocer Sainsbury’s experimented with distribution centres dedicated solely to online orders to relieve pressure on their physical supermarkets. However, what was once a logistical overflow solution has been repurposed into a high-stakes gamble.

Dark stores are capital-intensive assets that walk a tightrope between scale and profitability. The cost of maintaining inventory, managing spoilage, running 24×7 operations, and paying riders for lightning-fast delivery creates significant operational pressure. In the Indian context, this model faces distinct challenges. To fulfil the promise of 10-minute delivery, these stores cannot be on the cheaper outskirts; they must be nestled within prime, high-density residential clusters, where rental costs are high. Furthermore, they are becoming civic flashpoints. Resident Welfare Associations (RWAs) in major metros are increasingly pushing back against the noise, sidewalk encroachment, and traffic chaos caused by swarms of delivery bikes. Sure, the economics are improving following higher order values, better inventory management, and operational efficiency. The question is whether companies can scale faster than they burn cash expanding their networks.

That places the model of super-fast grocery delivery in some doubt. Examples from outside India show how this could end badly. JOKR, a 15-minute grocery delivery startup, burnt millions of dollars and exited the US market in 2022. Gorillas and Getir, two of the most hyped Western dark-store challengers, spiralled under unsustainable losses, aggressive discounts, and soaring operational cost before ultimately retreating from key geographies. Even US's Gopuff, one of the few survivors, reportedly burned $400 million in 2023 trying to stay alive. And lest we forget - there was Webvan, perhaps the mother of all ill-fated grocery-delivery experiments, which built giant infrastructure in the dot-com boom only to collapse in a blaze of cash and ambition.

The patterns are all too familiar: capital flooding in, rapid scale, steep losses, and then a reckoning.

Zomato and Swiggy may be hoping for a different ending. They may believe that India’s urban density, consumer behaviour, and unit economics will, some day, justify this burn. But their hope needs to be tempered with caution. Expanding faster, spending more on dark stores, subsidising consumer behaviour, none of that is a defensible profit model if the core math doesn't work. There will come a day when these companies need to justify their burns not by growth alone but by real, sustainable profits. If past fast-delivery experiments tell us anything, it’s that day may not be near.