The Game of “Passing the Cost”
Somewhere in 2017–18
Uber Eats had just entered the Indian market, following the same playbook it used for car services — acquiring customers by offering irresistible discounts. The strategy was simple: burn cash today, win customers tomorrow.
I was a bachelor then, living with a friend, and one day, we stumbled upon an unbelievable offer on UberEats. Or was it a bug? We couldn’t be sure. Whatever it was, it let us order from select restaurants at a whopping 80% discount for the entire month.
A meal that would usually cost ₹200 was suddenly just ₹40.
As we indulged in what felt like nearly “free” food every day, a question gnawed at us: who’s really paying for this?
We’d sit there, eating our discounted meals, wondering how this could possibly last.
Who would bear the cost?
What would this look like a decade later?
Could companies survive this kind of model?
Fast forward today :
My another close friend, a regular customer of a popular restaurant, noticed something strange (that we all know these days). Prices on his favourite food delivery app seemed… inflated. Curious, and a bit suspicious, he decided to run an experiment.
For the same meal, he placed two orders — one through Swiggy, the other through Zomato. At the same time, he went to the restaurant to pick up a takeaway order for comparison.
The result? The app orders were about 40% more expensive, even after using his premium Zomato Gold membership, which was supposed to give him a 5% discount. So almost 45% it would’ve cost without that membership!
Let’s analyse what happened in these years?
- The food delivery market, once teeming with players like Uber Eats and FoodPanda, is now practically a duopoly. Fewer competitors mean less choice and higher prices for customers — a classic case of Porter’s 5 Forces at work: less competition, less bargaining power for buyers.
- Restaurants now pay delivery platforms commissions as high as 30%. But if they pass that fee directly to customers as a “delivery or platform charge,” orders would plummet. After all, people are used to free or low-cost delivery.
- The workaround? Inflate the menu prices. The result? Customers are left comparing prices across platforms, suspicious of whether they’re getting a fair deal. Restaurants struggle with lower trust, and platforms lose loyal users.
It makes me think about what we were taught in business school — acquire customers at any cost during the growth phase, and worry about profitability later.
But at what cost?
- Now we have frustrated customers, used to deep discounts that no longer exist.
- Frustrated business owners, grappling with rising fees and shrinking margins.
It brings to mind the Japanese concept of “sampou yoshi,” which translates to “good for the seller, good for the buyer, and good for the world.”
(PS: While this example focuses on food delivery — it is observed across industry like Q Commerce pricing, paying for subscriptions & watching Ads, etc.)
Let’s put all Business/ Marketing/ Product Strategy aside and pause.
What do you all think? Is this a sustainable way? Are we heading in the right direction, or is this just a bubble waiting to burst?
Happy to hear thoughts both for / against the topic.
