Swiggy plans to add more than 430 Instamart dark stores by March and expects to break even next year

Newly listed food and grocery delivery company Swiggy plans to increase the number of its Instamart dark stores from about 600 to nearly 1,046 by March 2025 and increase the average size by 30-35% to meet the growing demand for a wider range of products. needs. The fast-paced business world is fiercely competitive.

In its first earnings call with analysts on Tuesday, the Bengaluru-based company said it was replacing some of its older smaller format stores of 2,500-2,800 sq ft with larger stores of 3,500-4,500 sq ft, which can store up to Holds 20,000 stock keeping units (SKUs). The company will also launch “megapods” measuring 8,000-10,000 square feet in first-tier cities, which can accommodate more than 50,000 SKUs and aim to provide consumers with more product choices within 10 to 30 minutes.

“The average store size (increase) is also largely because we have smaller stores to begin with. To cater to the growing demand for variety, it is very important that we do this, so this transformation is ongoing.” Swiggy Managing Director and Group CEO Sriharsha Majety said.

Overall, Swiggy added that it expects to more than double its active dark store area to 4 million sq ft by March 2025 (from 1.5 million sq ft in March this year) through the addition of new and expanded stores. .

Majety told analysts that the guidance to increase the number of dark stores was an extension of the company’s strong order growth in the September quarter, adding that the company was expanding aggressively to keep up with the industry’s increasing competitive intensity. The company said the expanded dark store area and expanded selection are expected to drive a higher share of user spend and increase average order value.

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The company said the changes are expected to help its rapid commerce unit Instamart achieve contribution breakeven in the third quarter of the next fiscal year (FY2026). At the group consolidated level, Swiggy expects to achieve positive adjusted Ebitda during the same period. Ebitda is earnings before interest, taxes, depreciation and amortization.

meal delivery plan

The company expects its food delivery business, its largest business by revenue, to post mid-teens growth this year while outperforming the category’s compound annual growth rate (CAGR) of 18-22% over the medium term.

“In India, food delivery as a category is still at a relatively early stage of development. With rising per capita disposable income, urbanization and digitalization demographic trends, the category continues to be unlocked progressively. As a platform, our efforts are Creating more consumption occasions and use cases for consumers, thereby scaling up consumption which today is largely occasion and indulgence-led, and growing the MTU (monthly transaction user) base,” Swiggy said.

Swiggy’s food delivery MTU has grown at a CAGR of 14% since FY22, reaching 14.7 million in the September quarter.

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For context, Swiggy’s food delivery business turned profitable last year, helped by increased ad monetization, lower delivery costs and leveraging technology to control variable costs.

In the past few months, Swiggy has also launched several initiatives such as 10-minute delivery service under Bolt and affordable options under Pocket Hero and Daily to increase user frequency on the platform. Mint reported earlier this week on Bolt’s performance and why Swiggy is optimistic about its continued growth.

Bolt currently covers more than 400 cities and has contributed to 5% of all food delivery orders on the platform.

Second quarter results

In the September quarter, Swiggy’s operating revenue grew 31% year-on-year to $3,601 crore, while losses narrowed to $625 Crores Rs. $657 crores.

Total expenses surged 22% $4,309 crore on account of increased investments in its express commerce unit.

Swiggy’s overall gross order value (GOV) touches $11,306 crore during the quarter, $8,703 crore in the same period last year. As of the September quarter, Instamart had 609 dark stores and an average order value (AOV) of $499.

Swiggy’s out-of-home consumer verticals, including dining out, events and experiences, embody GOV’s touch $734 Crores Rs. $The company said it had revenue of Rs 501 crore in the same quarter last year and expected to break even this fiscal.

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