India’s Food Delivery Boom Is Real, but the Business Model Is Under Stress

India’s food delivery market is transitioning from a high-growth digital convenience play to a structurally important services industry, and that shift is exposing hard business realities across the ecosystem.

From a macroeconomic lens, the sector is performing strongly. Food delivery platforms are growing at nearly twice the pace of India’s GDP and now account for a measurable share of national output. Gross value creation has doubled within two years, driven by higher order volumes, deeper restaurant penetration, and expanded logistics networks. Employment has also scaled rapidly, with over 1.3 million workers engaged across delivery, operations, and ancillary services. For policymakers and investors, this establishes food delivery as a durable economic contributor rather than a transient startup category.

At the firm level, however, restaurant economics tell a different story. Average platform commissions have risen materially, compressing already thin operating margins. While platforms deliver incremental demand, many restaurants report declining contribution margins on delivery orders. This has prompted a growing number of operators to actively reassess their dependence on aggregators, particularly where delivery accounts for a large share of total revenue but contributes disproportionately less to profits.

Data access remains a central point of friction. Although a majority of restaurants receive limited performance insights from platforms, access to first-party customer data is still constrained. This limits restaurants’ ability to build repeat demand, optimize pricing, or run independent loyalty programs, reinforcing long-term platform dependence and weakening brand equity outside the app environment.

Competitive dynamics are also evolving. New partnerships between restaurant discovery platforms and independent logistics providers indicate an attempt to unbundle the traditional aggregator model. These alternatives are positioning themselves on lower commissions and more transparent economics, aiming to attract margin-sensitive restaurants. However, operational complexity, delivery reliability, and consumer trust remain high barriers to scale.

The strategic takeaway is clear. The next phase of growth will be defined by unit economics and value distribution rather than market expansion alone. Platforms that improve commission structures, enhance data transparency, and support sustainable restaurant profitability will be better positioned for long-term dominance. Conversely, restaurants that diversify demand channels and invest in direct customer relationships will reduce structural risk in an increasingly concentrated market.