Swiggy, Zomato Blackmailing Restaurants To Give More Discounts? Case Filed With CCI By NRAI
The Indian food industry scenario is going through very tumultuous times these days. A lot is going. First, we have a pandemic. It has caused customers to stay away from sporadically open restaurant services. With lesser foothold for dine-in orders, adapting to an online food delivery system was the need of the hour for most of them. Second, for the online food delivery system, the ecosystem is being ruled by the duopoly of Zomato and Swiggy (together they hold more than 80% of the market). So restaurants throughout the country seem to have no other option than to kneel to the demands of these aggregators. And this is giving rise to clashes between both parties.
NRAI highlights 3 concerns of the grieving industry.
In this position of friction between both parties, the National Restaurants Association of India (NRAI) decided to act for the interest of the Food and beverages industry in the country. They approached the Competition Commission of India (CCI) on 1st July 2021. They presented their case in front of CCI. And now on 12th July, they have submitted some ‘additional information with evidence’ to CCI.
In this submission, NRAI has put forward, 3 concerns of the industry. First, Zomato and Swiggy are charging exorbitant commissions from the restaurants. In 2020-2021, the commissions ranged from 25% to 30% of the order value. Second, numerous instances of delay in payment by Zomato and Swiggy have caused disruptions in the cash flow of the partner restaurants. Third, for getting good visibility on the platform, the restaurants are being forced to give discounts. Forth, the restaurants are being threatened to be delisted from the platform if they are found to keep price parity.
Woes of restaurants are deep
In the statement, NRAI also said, “They have shifted the entire cost burden on the restaurants. A combined effect of (1) to (3) is that a lot of our partners are in extremely stressful conditions and are on the verge of closing. The restaurants are running at a loss since they cannot meet their expenses, yet they had to rely on Zomato and Swiggy due to the pandemic curbs and sentiments,”
NRAI has also been in talks with Zomato and Swiggy, but it doesn’t seem to have bore any fruits.
Along with the four majors concerns listed above the NRAI seems to have others concerns like bundling of unwanted services, data masking, and exclusivity of restaurants, etc.
How Zomato and Swiggy sail through, is an interesting event that will unfold soon.