Food Delivery Services Have Been Misusing Their Position Say Mid Sized Restaurants

According to an update by the Economic Times, about 500 small and mid-sized restaurants have filed an online petition against food delivery companies. They say that these companies that include Swiggy, Zomato, Uber Eats and Foodpanda have been misusing their position. The complaint has been filed to the Competition Commission of India (CCI) and the Prime Minister’s Office (PMO). The complaints of these restaurants include deep discounting, internal as well as in house kitchen sourcing.

Dominance Of Delivery Companies

“The companies have been continuously found to misuse their dominant position with the aim to wipe out small and medium enterprises,” says the petition, reveals the Economic Times. Currently, Zomato and Swiggy have denied these complaints and Foodpanda and Uber Eats haven’t responded. “Unlike retail, FDI (foreign direct investment) restrictions are not applied on the restaurant sector or food service aggregators,” Rahul Singh, president of the National Restaurant Association of India (NRAI) told the publication. “Predatory practices will be examined by the CCI. As an association, we have a roundtable discussion next week with all four major food delivery aggregators to address deep discounting and the cloud kitchen issue which is adversely affecting the restaurant industry.”

Deep Discounting

“Deep discounting by online food delivery platforms is impacting footfalls and diverting consumer traffic to these platforms,” he said. “Besides, the cost of doing business is escalating because commissions are directly getting impacted. These are hurting us in the long run,” said Anurag Katriar, chief executive of deGustibus Hospitality. On the other hand Zomato says that the discounts are optional. “Discounts are merely a mechanism to encourage user participation and all our restaurant partners can choose to participate in a discounting campaign,” a Zomato spokesperson told the Economic Times.

Misusing Database

The petition said that, “They (Swiggy) are unethically diverting customers to their own kitchen. A client is required to pay huge tariffs to get their products listed on the platform; however, the first ad which is shown to an end-user on logging in is Swiggy’s in-house kitchen – The Bowl Company.” The petition said this amounts to “misusing the customer database.” A spokesperson from Swiggy told the Economic Times that, “We do not practice diversion of traffic to any brand unethically. We doubled the number of restaurant partners on the platform to over 55,000. The commissions we charge are a function of the value we generate for our partner and are mutually agreed upon. With private brands, we aim to meet unmet consumer needs.  Single-use ordering was a gap in the market and hence we created The Bowl Company.”