Food aggregators like Zomato and Swiggy, once seen as game changers for the restaurant industry, are now facing criticism for allegedly using restaurant data to compete against them.
Many restaurant owners argue that these platforms, originally designed to facilitate food delivery, are now launching their own brands, leveraging insights from partner businesses to gain an unfair edge.
Restaurant owners now believe they are being outplayed, outpriced and outmanoeuvred
Restaurateurs at the National Restaurant Association of India’s (NRAI) annual townhall, attended by 8,000 industry members, raised concerns over rising friction with food aggregators, debating their impact on the restaurant business
The key areas of concern for the restaurants include:
- Private Labelling by Aggregators: Platforms are launching their own food brands, using restaurant data to gain an unfair advantage
- Deep Discounting Practices: Heavy discounting is disrupting both dine-in and delivery businesses, making it harder for restaurants to sustain profits
- Loss of Customer Ownership: Restaurants claim aggregators have ‘stolen’ their customers, turning loyal patrons into platform-dependent users
- Aggregator Payment Platforms: Bundled payment gateways force restaurants into higher costs and limit their autonomy
- No Authority on Commission Rates: 69% of restaurateurs feel they have no negotiation power when it comes to commission rates
- From Partner to Rival: With exclusive data access and premium placement on their own platforms, aggregators are directly competing with restaurants
For years, food aggregators have positioned themselves as enablers, bringing restaurants into the digital age. But now, many believe they are tilting scales in their own favour. By launching private labels and using valuable restaurant data, these platforms are no longer just service providers, they’re becoming direct competitors. Restaurants allege that aggregators enjoy premium visibility on their own apps, making it harder for independent eateries to compete.
Then there’s the issue of payment bundling — forcing businesses into aggregator-controlled gateways, increasing costs, and reducing autonomy. And let’s not forget the deep discounts that disrupt the dine-in and delivery sectors, creating an unsustainable price war.
“The delivery business offers scale and visibility, but rising commissions, increasing discounts, and opaque policies blur the line between independence and dependency, raising concerns about profitability and sustainability,” says Sagar Daryani, NRAI President. Aggregators venturing into private labels, and using our data to sell similar products, is unacceptable. Despite assurances, this encroachment into our territory feels like a betrayal, he adds.
“We are caught between aggregators competing with Zepto, driven by investor and shareholder pressures. To protect our interests, we must unite, be vocal, and explore alternatives like the Open Network for Digital Commerce (ONDC). Strengthening our dine-in business is crucial, as it remains our primary source of profit,” he avers.
69% of restaurant owners say they have no room to negotiate commissions, further fuelling concerns of an uneven playing field. Many fear that if left unchecked, these practices could reshape the industry, and restaurants are left struggling to survive. They hope to find solutions for a more sustainable collaboration in the sector. With concerns mounting, will regulators step in?
