Exclusive: Now, KFC Marks ONDC Foray With Pilot In Gurugram

Quick service restaurant (QSR) chain KFC has become the latest food company to join the Open Network For Digital Commerce (ONDC), Inc42 has learnt. 

KFC has roped in Magicpin to help it with tech integration, catalogue assortments, and logistics capabilities for joining the government-backed network, sources said. 

The QSR chain has begun a pilot programme in Gurugram on ONDC and the nationwide roll out is expected soon. 

“More than 1,000 KFC stores are expected to join the ONDC network within the next one month,” one of the sources said. 

Query mails sent to ONDC, Magicpin, and KFC on the development didn’t elicit any response till the time of publishing this story.

The development comes at a time when a number of big brands are joining ONDC amid an uptick in orders on the network. Earlier this year, Domino’s and McDonald’s went live on ONDC. 

Meanwhile, Zomato-backed Magicpin was among the first few big names to join ONDC. It has since then helped multiple food companies like Rebel Foods, McDonald’s, Burger King, Wow! Momo, Pizza Hut, Nirula’s, Krispy Kreme, Taco Bell, Barbeque Nation, Barista integrate with ONDC.

Amid all these, a number of large restaurants are also mulling joining ONDC to scale up their online business due to the increasing take rates of food ordering giants Zomato and Swiggy, the aforementioned sources said.

“The take rates of buyer applications on ONDC still remain much lower compared to those of Swiggy and Zomato, despite the surge in order volumes on ONDC,” an industry source said. 

ONDC Plans Sharp Reduction In Discounts 

A large number of restaurants and food chains began joining ONDC last year as the latter introduced a slew of discounts for network participants like Paytm and Pincode for food orders. These discounts, which are revised every few months by ONDC, have helped attract customers.

The discounts are offered to network participants based on the number of orders. These discounts are then used by the participants to run promotional schemes.

However, ONDC recently told participants that it plans to reduce the incentives offered to them by about 75%. It also asked the participants to not adjust the discounts for tax calculations.

“The Buyer apps are free to structure the pricing interventions but shall not adjust these for the purpose of tax calculation, especially GST. Thus, GST shall be computed by each participant in the transaction at the gross value i.e. value without adjusting such transaction level discounts, cart level discounts, subsidised delivery etc,” ONDC said in a letter to the network participants, as reported by Moneycontrol. 

However, the reduction in incentives offered to network participants is not expected to have any major impact on the number of food orders, the sources said. They added that the buyer side apps on the network are charging low take rates currently to grow their user base, making their offerings cheaper compared to Zomato and Swiggy.

ONDC recorded 1 Cr monthly transactions in June, including 14 Lakh in the foods and beverages category and 8 Lakh in the grocery category, the sources added. The number of transactions on the network doubled last month from 50 Lakh in December 2023.