Restaurants in Bengaluru have threatened to stop accepting orders from food delivery aggregators such as Swiggy and Zomato from August 15. This is in case they fail to revise their commissions, discounts, advertising fees and payout deductions.
The Bruhat Bengaluru Hotels Association (BBHA) announced the decision on July 29, following multiple discussions with the delivery platforms. The association, along with other restaurant groups, has asked the platforms for a written response, demanding transparency in their payouts. They argue that the commission cuts levied by the platforms are immoderate and affect their profits.
These platforms act as digital middlemen. They list the restaurant on their app, facilitate online transactions, and provide a rider to collect and deliver the food. In return for their service, the platform demands a certain percentage from the total food bill. According to BBHA president S Subramanya Holla, this commission can range from 8 per cent to 28 per cent.
On top of the levied fee, the platforms also add deep discounts without prior approval from the restaurant partners, which further slash down the bill. If a customer cancels the order, or registers a complaint, they bear the loss. The BBHA argues that after operating costs are added, their earnings are significantly affected. They also add that the platforms often charge them for advertising without explicit consent.
According to foodcost, a digital tool that helps restaurants calculate pricing for their food, this is a general breakdown of costs charged by the platforms: commission costs ranging from 24 per cent to 25 per cent, an 18 per cent GST, 0.1 per cent TDS and a payment gateway fee of around 2 per cent.
For a dish that hypothetically costs ₹400, with packaging charges, the restaurant will receive around ₹220 as payout.
The restaurants have mainly demanded that the platforms provide a detailed breakdown of commissions and payouts. They have also asked for fairer policies for customer complaints and order cancellations, and dedicated managers to facilitate two-way communication.
The NRAI has supported the cause, but has pushed for negotiation.
“It is unfortunate that restaurants felt so cornered that they believed a boycott of Swiggy and Zomato was their only option", said Sagar Daryani, the president of The National Restaurant Association of India (NRAI), to TOI.
These platforms are facing an ongoing antitrust case filed by NRAI. It had asked the Competition Commission of India (CCI) to forbid high commissions, price-parity clauses and forced exclusivity. An initial investigation revealed that both Swiggy and Zomato allegedly breached fair trade provisions.
