With current ruckus that is going between the restaurant owners and the food-tech company over freebies, discounts and low profit margins by restaurants because of these freebies. The restaurant owners signed a petition requesting the Govt to investigate the issue by citing that these organizations seem to harm the PM’s motive of making India a startup nation. Swiggy and Zomato reportedly denied the accusations.
Reverting to the petition signed, a spokesperson at Zomato said, "At Zomato, we believe in providing the best services and experiences to our users; and endeavour to meaningfully help grow the businesses of our partners as well. Our platform lists more than 75,000 restaurants, of which a significant majority is small and mid-size restaurants. We have significantly expanded our online ordering and food delivery services and are currently present across 118 cities in India.”
He also added that the brand has been able to deliver long-term growth for our restaurant partners by connecting them with more users. Infact, a lot of our restaurant partners have been able to expand their operations since food delivery has helped them exponentially leverage the fixed and man-power costs. Discounts are merely a mechanism to encourage user participation and all our restaurant partners can choose to participate in a discounting campaign.
Commenting on the same Spokesperson at Swiggy added, ““Our fair practices have been widely acknowledged by the restaurant community and as a result, in the last 12 months alone, not only have we doubled the number of restaurant partners on the platform to over 55K, but more importantly our partners have seen a two-fold increase in Swiggy’s contribution to their business.”
On the matter of cross holding, Zomato said, "With HyperPure, our aim is to provide organic and residue free fresh produce to all the restaurants at their doorsteps while helping them save on the purchasing cost. The service is only present in Bangalore currently and already has a quality breadth of restaurants. HyperPure has received a great reception so much so that our order list is bigger than what we can currently service. It is helping restaurants save efforts of sourcing food ingredients from an otherwise unorganised market. A small to mid-size restaurant stands to save 10-15% in their monthly expenses on ingredients purchase. We don’t constrain the restaurants on our platform to associate with HyperPure, doing so will be completely against our ethics. Restaurants can choose the HyperPure services if they find them beneficial enough.
"Zomato’s prime objective is to contribute to the growth of the restaurant industry in the country, which we have been doing over the last decade with the help of our various services. We are discussing the matter with the involved restaurant partners to achieve an amicable solution, which would benefit all the parties in the ecosystem.”
The discontent of restaurants against food-tech startups first came into the scene in December 2018, when the Group for Restaurateurs’ Empowerment, Advancement, and Togetherness (GREAT), an independent group comprising restaurateurs across Bengaluru, wrote an open letter highlighting their plight. The association had complained against deep discounting and the private label push on these platforms.
The group had also called for meetings and encouraged customers to order via a call or through the restaurant website. In the last few weeks, several restaurants have been observed as being “closed for online ordering” on platforms such as Zomato and Swiggy.
Also, Hotel & Restaurant Association of Gujarat wrote a letter to the Zomato Regional Head, asking restructuring of the online ordering commissions, discounts, payment and cancellation policies. The letter read, “At the onset we would like to thank you for providing decent business to the city of Ahmedabad. However, off late it is becoming difficult for the restaurants to make any profit from business provided by your company.”
The Organization has also invited all the stakeholders and representatives of these food tech players for a meeting on 10th January. Also, NRAI will also be holding a meeting with these players in its headquarter this week.