Swiggy Instamart Expands Portfolio With 'Instacafe': New Recipe For Profitability?

Swiggy’s Instamart has launched a cafe-like division named Instacafe following a similar move by its competitor Zepto with Zepto Cafe. Instacafe is the latest attempt by Swiggy Instamart to increase its profitability as cafe products typically have higher profit margins than grocery delivery.

What Happened? Per a Moneycontrol report, Instacafe offers ready-made snacks such as sandwiches, puffs, baos, coffee, cookies, tarts, croissants, and more. Customers can add these items to their grocery orders from Instamart.

This launch marks another expansion for Instamart, which has previously introduced its own private brands and a line of electronics and mobile accessories. Adding more categories is a strategy to increase the average customer’s order size and thus increase the profit margin per order.

Swiggy Instamart views Instacafe as a virtual counter for fast-moving snacks, a common feature in physical grocery stores. Instacafe, which started testing in select areas of Hyderabad last year and expanded to Bangalore in March this year, is planning to add more items to its menu.

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Currently, Instacafe is in its pilot stage with around 60 stock-keeping units (SKUs) or items available in specific locations in Bangalore and Hyderabad. Unlike Zepto Cafe, which sources branded products in bulk, Instacafe’s food items are mainly unbranded and procured directly by the dark-store managers servicing a particular location.

Despite concerns that Instacafe could compete with Swiggy’s primary business, Swiggy maintains that the offerings are quick snacks rather than full meals. However, both companies seem to be expanding into larger meal options, suggesting an evolving strategy in response to the increasing scrutiny of quick-delivery start-ups’ business models.

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