SUMMARY
Restaurant owners are complaining against the high commissions
Swiggy and Zomato together handle 70K to 80K orders everyday in the city
Restaurants said that they would not increase food prices to increase margins
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A boycott of food delivery players Swiggy and Zomato by the Gujarat Hotel and Restaurant Association is now well into its second week as restaurant owners refuse paying the high commissions demanded by the two companies.
The association has also reportedly said it would not increase food prices as demanded by Swiggy and Zomato to accommodate the high commissions. It is not yet clear as to how many restaurants are participating in the boycott currently.
As per industry estimates, Swiggy and Zomato together handle 70K to 80K takeaway orders with average order size worth INR 270 ($17.83) per day in Ahmedabad city.
The boycott by restaurant owners was reportedly started on Janaury 11 with a protest against Swiggy after over 500 restaurants and hotels in the city blacklisted the platform for its poor business practices. After this the restaurant association also threatened to stop serving Zomato and UberEats on January 14.
One of the main causes for the protests are the commissions charged by the foodtech companies which can go up to 22% of the order value.
“Online companies have been forcing restaurants to raise the food price by 20% to absorb the high commissions,” Rohit Khanna, a committee member of HRA told ET, adding that it’s more than 10 days since the local industry decided to boycott Swiggy.
The list of demands put forth by the industry includes – lowering commission, 100% payment made to restaurants in case of cancellation, processing payments every 48 hours, and sharing customer database. According to a report Swiggy has conceded to the demand of 100% payment for orders against cancellation and Zomato has agreed to give restaurants the right to deliver food by giving them the hybrid model option to enable self-deliveries
Representatives of Swiggy and Zomato, have however reportedly claimed that their business in the city has stabilized, however with the boycott now in its second week it seems that the high commissions charged by online food ordering platforms is still a thorn in the side of restaurant owners in the state.
[The development was reported by ET]
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