NRAI also expressed grievance over the flouting of contract terms by aggregators.
After launching a protest against deep discounts offered by online restaurant reservation platforms and dine-in verticals of food aggregators, the National Restaurant Association of India (NRAI) on Monday shot off letters to food delivery platforms Swiggy, Zomato, Uber Eats and Foodpanda, expressing concern over “predatory market practices” resorted to by them.
The NRAI has listed eight issues in the letter, reviewed by FE, and called for consultation with the online platforms on the same. The restaurant body said food delivery firms engage in steep discounting, going up to as much as 70% throughout the calendar year, hampering businesses of restaurants. “It is pertinent to note that these discounts are most often funded by the restaurant operators, sometimes under veiled coercion,” the association said.
NRAI said restaurants are being charged “uneven and arbitrary” commission on the net bill value of the food by the delivery platforms. The body suggested commissions should be determined on the basis of logical metrics like average order value (AOV) or volume of business.
“Any restaurant which is getting orders through the food delivery platforms, pay a certain commission to them. That commission varies from 12% to 30% and this is arbitrary,” Anurag Katriar, head of NRAI Mumbai Chapter, told FE.
Katriar said when the platforms run discount events, they ask the restaurants to participate, failing which they warn restaurants that their order volumes will go down. “There is lack of transparency. They will onboard you at… say 15% (commission); once the business builds up, they will make it to 20%,” Katriar said. Also, the delivery and restaurant charges are retained by the aggregators, he added. According to analysts, Swiggy delivered an estimated 59 million orders in FY18 and Zomato did 39 million orders. While Zomato earlier this year in a blog claimed that its revenues tripled to $206 million in FY19 from $65 million in FY18, Swiggy posted 232.17% jump in revenue to Rs 441.99 crore in FY18.
NRAI also expressed grievance over the flouting of contract terms by aggregators. The terms and conditions reached between an online platform and restaurant is not “sacrosanct” and often “lopsided”, favouring aggregators, the body said.
Further, NRAI said aggregators refrain from sharing customer data with restaurants, which amount to “disconnecting” them from customers. The body also voiced opposition to online platforms developing their own brands which they say create “grossly unfair playing field”, forcing restaurants to use the platform’s delivery services, unreasonable rules of engagement resorted to by them. Also, platforms’ parameters for ranking restaurants is not “consistent”, the association said.
“There was a high demand of immediately extending the logout movement to the delivery vertical as well. However, our responsibility as an industry body compelled us to engage in dialogue first,” NRAI said in the letter.