Numerous instances of delay in payment by Zomato, Swiggy: Restaurant Association
The National Restaurant Association of India (NRAI) on Monday filed additional information with evidence with the Competition Commission of India (CCI), highlighting that Zomato and Swiggy are charging a commission in the range of 25 to 35 per cent of the order value in 2020-21.
NRAI said there have been numerous instances of delay in payment by Zomato and Swiggy which has affected the entire cash flow of its partners.
It said Zomato and Swiggy are forcing restaurant partners to give discounts on their platforms to maintain good visibility on the platform. They have shifted the entire cost burden to the restaurants.
On July 1, the National Restaurant Association of India (NRAI) filed information with the Competition Commission of India highlighting the inherently anti-competitive practices of Zomato and Swiggy.
NRAI highlighted the practices by Zomato and Swiggy which had a debilitating effect on the restaurants and the entire ecosystem: (a) Bundling of services, data masking and exorbitant commission charged; (b) Price parity agreements; (c) Deep discounting: forcing the restaurant partners to give discounts to maintain appropriate listing; (d) Exclusivity of listed restaurants.
While the promoters of Zomato have described the concerns expressed by NRAI as misplaced, NRAI said it had received an enormous amount of support from partners/restaurants in the ecosystem all over the country who have come forward and given more evidence to show how Zomato and Swiggy have used their market power, especially during the pandemic, to impose terms which the restaurants have no choice but to accept.
"These deep funded aggregators have adversely affected the business interest of our partners and in the process, hampered the entire F&B ecosystem," NRAI said.
NRAI said the combined effect of these practices is that a lot of its partners are in extreme 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.
These food aggregators are threatening to delist the restaurants if they do not maintain price parity. There have been instances wherein some partners have been delisted from the platform since they offered some better rates to consumers on other channels.
NRAI believes that the evidence furnished before the CCI will further highlight the unfair business practices of Zomato and Swiggy and the authority will investigate the conduct of these aggregators.
Anurag Katriar, President of NRAI, said, "Ever since the news of us filing information against food aggregators with the CCI came out in the public domain, we have received overwhelming support from our restaurant partners and the industry in general. Many members have shared their personal experiences of misuse of power by these food aggregators."
"This prompted us to file some additional information with the CCI to ensure that our continued efforts to safeguard the interests of the F&B industry will bear fruit and this in turn will help in providing a level playing field for each player in the marketplace. We are committed to the cause of our partners, and we will put our best efforts with the CCI to ensure that the practices of these marketplace platforms are aligned to the benefit of the entire F&B industry."
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Meenal Mamdani
2 months ago
In America too companies like Door Dash charge a pretty hefty fee, varying from 10 to 30%, depending on restaurants.
Could restaurants in an area band together and start a local delivery service? Sure if they could advertise it cheaply. Wonder if social media could do this for restaurants.
2 months ago
Time ripe of NR AI or a separate entity as spv even in coperative sector should take up this activity on no profit no loss basis or minimum margin.This would benefit not only small resturants and small hotels but also users
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