Restaurants Are Backing Out From Food Tech Startups Like Swiggy & Shadowfax

Due to high commissions and patchy delivery services, several restaurants in Bengaluru are backing out of food tech delivery platforms like Swiggy and Shadowfax, reports Economic Times. A lot of restauranteurs say that the high commission fee of almost 25% on the price of an order charged by these platforms makes it unsustainable, but the other issue they’re facing is delayed pickups, shabbily dressed delivery boys and the deteriorating standards of food delivery.

“The basic problem with the industry is that they fail to deliver an experience similar to what we give our customers in the restaurant,” said Ashutosh Jha, associate vice-president for R&D at TGI Friday’s, which closed ties with food delivery players Shadowfax and FastOx. “Many times we have waited for an hour or two for the delivery boy and had to instead recook the food and send our own staff to fulfill it,” he said.  Aljeesh Siddique, managing partner at Caboodle, the company that manages Berry’d Alive, said, “Their volumes are increasing at the cost of our walk-in crowd. So their business is not adding to our topline.” The restaurant has plans to completely retract from Swiggy and Roadrunnr.

According to a Morgan Stanley report, online food aggregation business in India can grow to $4.4 billion by 2020, implying a 134% annual growth till then. We’ve seen a sudden growth in food delivery platforms popping up all over the country. Lots of startups are succeeding, but lots are also closing shop. What is obviously becoming difficult for restaurants and services like this is that it’s difficult to retain clients. And with the growth in studies and these different services, restaurants and hospitality brands are handling their own deliveries, which cuts down the commission paid to another company, and the quality check is much better.

Swiggy has crossed their million orders a month mark and Zomato is close behind, while TinyOwl got acquired by Roadrunnr and Spoonfed shut all operations in Bengaluru and moved to Dubai. The great thing about these companies and their services is that it provides restaurants that want to reach a bigger market, an opportunity to have food lovers try their dishes. But like Siddique said, it cuts down the number of people visiting the restaurant per day and that doesn’t change the market for the restaurant itself.

Unless these delivery services get their processes up and follow a specific system and deliver not just to the customer, but also their clients, there’s very little hope of them continuing in the positives. Even with their profits and their growing number of orders, sooner or later, the number of restaurants that walk away will depend on how the platform services the clients.