6:16What is a steady state contribution margin or EBITDA that one should look at when they look at the food margin?
7:16How much of the discussion happened during that time and what led to your valuing your company and then the numbers that you did as against what was earlier perceived?
We have some other companies to talk about as well. Swiggy's IPO will hit D Street on November 6th. Our colleagues Shilpa Ranip and Mangalam Malu spoke to Sriharsha Majety, the Managing Director and Group CEO of Swiggy, along with Rahul Bothra, who is the Chief Financial Officer at the company, and began by asking them about the sustainable growth on top line and path to profitability for food and quick commerce.
In the food delivery business, we turned profitable not only at the contribution margin level but at the EBITDA level. In terms of the overall platform, growth has been very strong for us over the last three years, growing at 32% and scaling well. So overall, we're very happy with the trajectory that each of the businesses are demonstrating.
Right, but you're not saying what the street wants to know. Because while they have turned contribution positive for the food delivery business, on the street they want more. Now that you're listing, you also have a listed peer with a trajectory that we've seen on a lot of the parameters they're above what Swiggy is right now, which is not to say that you're any less, it's just that you are at different stages of growth in your life.
Correct. I think, look, there's a lot of context. We each have our own context and we are in very, very exciting categories. And our strategy, our capital allocation, everything is going to be a function of our excitement and what we can go after in each of these. Like Rahul mentioned, we've demonstrated the profitability in the food business. We feel good about its future going forward. As for quick commerce, I think it's a once-in-a-lifetime category and I think we are seeing consumption patterns change for consumers and there's so much to be done. So our endeavor will be to make sure that we do the fullest of our ability to make sure that we grow and serve customers well and make sure that everything comes together nicely.
But for quick commerce, you recently said that the peak of the investment is behind you, but you're still not contribution margin positive either. So what is the trajectory there for quick commerce? Because even for your peer, that has been the growth driver. So how are you looking at the quick commerce business for you in terms of being, is it also going to be the growth driver for you? And sort of trying to get a sense of the path of profitability on that front also.
See, maybe I'll take this. I think on quick commerce, what really amazes us is the way consumers are reimagining things of what can be delivered to them. So it's almost like every quarter we have to recalibrate around what is the number of categories that we have to be there, what are the number of SKUs we have to launch, and there's a recalibration happening. Growth is accelerating, so there'll be a certain amount of new store additions that we'll continue to do. The old stores continue to mature well, which means they become profitable over a period of time, and the new stores come in because consumers want a lot more. So I think it's a recalibration of our overall growth trajectory in line with the demonstrated path to the contribution margin that we will continue to demonstrate.
So let's get a little more specific now. As of the first quarter, you had around 557 quick commerce dark stores. How many of them are mature? And mature stores, what is the contribution margins that they do? If you could give us that sense. And you are doing about 980 or closer to 1,000 crore in terms of dark store expansion. So what's the aspiration there? How many are you looking to add over the next couple of years? What's the milestone target that you have?
No, we will give specific numbers and not just directional numbers when we can. Currently, there are regulatory constraints that we cannot talk about. But to give you a sense of how we are planning our overall store expansion, I think store expansion is a derivative of growth and not otherwise. It's not like we want to add a number of stores which is ahead of even the growth journey. So calibration will happen according to the growth of the category.
So in terms of the overall capex requirement, it could vary depending on the size of the store, but anywhere between 65 lakhs to 85 lakhs is what we have seen.
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Majety, S. (2024, October 30). Swiggy's ₹11,327 Cr IPO Opens On Nov 6 | Aim To Grow At The Fullest Of Our Ability, Says Management [Interview transcript]. CNBC-TV18. CEOInterviews.AI. https://ceointerviews.ai/interview/770441/
MLA
Sriharsha Majety. "Swiggy's ₹11,327 Cr IPO Opens On Nov 6 | Aim To Grow At The Fullest Of Our Ability, Says Management." CNBC-TV18, 30 Oct. 2024. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/770441/.
BibTeX
@misc{majety2024_770441,
author = {Sriharsha Majety},
title = {Swiggy's ₹11,327 Cr IPO Opens On Nov 6 | Aim To Grow At The Fullest Of Our Ability, Says Management},
howpublished = {Interview transcript, CNBC-TV18. CEOInterviews.AI},
year = {2024},
month = {oct},
url = {https://ceointerviews.ai/interview/770441/},
note = {Speaker-attributed transcript with timestamps}
}
