{"id":496243,"date":"2025-01-22T20:15:09","date_gmt":"2025-01-22T14:45:09","guid":{"rendered":"https:\/\/inc42.com\/?p=496243"},"modified":"2025-01-22T23:47:39","modified_gmt":"2025-01-22T18:17:39","slug":"nrai-zomato-swiggy-food-delivery-private-labels-concern","status":"publish","type":"post","link":"https:\/\/inc42.com\/features\/nrai-zomato-swiggy-food-delivery-private-labels-concern\/","title":{"rendered":"Inside The NRAI\u2019s Battle Against Zomato, Swiggy\u2019s 10-Minute Food Delivery"},"content":{"rendered":"

\u201c99% of restaurant partners in the delivery business don\u2019t make money,\u201d said Sagar Daryani. The National Restaurant Association of India (NRAI) president and Wow! Momo cofounder was addressing thousands of fellow restaurant owners on a YouTube live stream. Their target: Zomato and Swiggy\u2019s most recent forays into 10-minute food delivery.\u00a0<\/span><\/p>\n

And now the restaurant body is also mulling legal action against both foodtech majors over what Zomato and Swiggy\u2019s restaurant partners call private labelling<\/a>.<\/span><\/p>\n

\u201cWe are in discussions with our legal counsel, we have formed our plan of action and we will execute it in a couple of weeks,\u201d a source within NRAI told Inc42 hours before Daryani\u2019s townhall address.\u00a0\u00a0<\/span><\/p>\n

NRAI Vs Blinkit Bistro, Swiggy Snacc\u00a0<\/b><\/h2>\n

Reports had already indicated that the NRAI along with the Federation of Hotel & Restaurant Associations of India (FHRAI) is likely to approach the Competition Commission of India (CCI) over alleged anti-competitive practices by Zomato and Swiggy and their respective 10-minute food delivery services Blinkit Bistro and Snacc.\u00a0<\/span><\/p>\n

Sources further claimed that Zomato and Swiggy were forced to make the foray due to pressure from investors and shareholders driven by the launch and expansion plans of Zepto Cafe.\u00a0<\/span><\/p>\n

Earlier this month, NRAI representatives met the managements of Zomato and Swiggy to address the issue, but the meeting is said to have ended in a stalemate. Now, while the NRAI is hopeful of a favourable outcome based on past such disputes, the restaurant body is also mindful that further steps may be required to solve this particular concern.\u00a0<\/span><\/p>\n

For instance, sources indicated that many of the restaurant partners are considering moving away from Zomato and Swiggy in case the companies fail to address their concerns.\u00a0<\/span><\/p>\n

Sources also said that both companies had already transgressed into restaurant territory with their affordable meal delivery services Zomato Everyday and Swiggy Daily, cooked in company-owned private kitchens. But the launch of Blinkit Bistro and Swiggy Snacc is seen as a bigger threat by the NRAI, many of whom are dependent on aggregators not just for delivery but also dining reservations.\u00a0<\/span><\/p>\n

Blinkit CEO Albinder Dhindsa<\/span> clarified<\/span><\/a> that parent company Zomato will never launch private brands on the main app to compete with its restaurant partners, which is why the Bistro app is launched by Blinkit and is separate from the Zomato app.<\/span><\/p>\n

This after the NRAI called for \u2018industry status\u2019 for the food services sector to prevent exploitative practices of foodtech platforms and ensure a level playing field for restaurants, delivery partners and consumers.\u00a0<\/span><\/p>\n

In response to the much-publicised townhall meeting, Zomato CEO Deepinder Goyal wrote to the restaurant partners<\/a> saying, “Bistro is not an existential threat to the restaurant industry.”<\/p>\n

He also dismissed the usage of the term private label or Zomato Kitchen to describe Blinkit Bistro. “In the past, I have expressed that Zomato as a restaurant-aggregator will never compete with its own restaurant partners, unlike players such as Amazon who sell their own private labels on Amazon. Zomato has fully backed this commitment by never opening a physical restaurant and will NOT use Zomato as a distribution channel for kitchens that we do,” Goyal’s letter stated.<\/p><\/blockquote>\n

Inc42 also reached out to Swiggy for a comment, and we will update this article if and when the company responds.<\/p>\n

Can ONDC Stand Up to Zomato-Swiggy?\u00a0\u00a0<\/b><\/h2>\n

The meeting on Wednesday, January 22 saw more than 2,000 live viewers at one point \u2014 most of them restaurant partners. NRAI president Daryani claimed restaurants are exploring ONDC as a potential alternative to food delivery platforms.<\/span><\/p>\n

This, of course, is not a new idea. Paytm, Magicpin, Ola Consumer have already had some success with ONDC food delivery, but the open network has not managed to make a big dent in terms of market share, and certainly not enough to make Zomato and Swiggy take notice.\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

If anything, the \u2018private labelling\u2019 can be seen as a last straw in an already strained relationship. Both the NRAI and FHRAI have raised concerns about delivery platforms forcing deep discounts on restaurants, charging high commissions for order fulfilment and pressuring them to advertise on their platforms.<\/span><\/p>\n

Some participants at the NRAI townhall meeting today claimed the terms of engagement are biased towards platforms, and Zomato and Swiggy unilaterally and frequently change the terms of service for restaurant partners.\u00a0<\/span><\/p>\n

Citing ONDC as a potentially viable alternative, Daryani said, \u201cONDC is not an aggregator; it operates as a seller-buyer platform. Essentially, buyers use the platform to purchase products, and you, as a seller, become a listed provider. In ONDC, commissions range from 3% to a maximum of 7%, including logistical costs.\u201d<\/span><\/p><\/blockquote>\n

He added that this is more economical for restaurants than depending on the duopoly for growth.\u00a0\u00a0<\/span><\/p>\n

Daryani also claimed ONDC is favourable for consumers as restaurants can lower the pricing for ONDC orders compared to Zomato and Swiggy thanks to the lower commissions. The Wow! Momo founder also argued that customer data for ONDC orders will be retained by restaurants alone.<\/span><\/p>\n

The NRAI claims that food delivery giants have access to crucial consumer data but do not share it with restaurant partners. Instead, they have leveraged this data to launch new verticals that compete with restaurants.
\n<\/span><\/p>\n

In response to this allegation, Goyal clarified, “In fact, all Zomato data and insights are available to all restaurant partners and the public through Zomato Trends.”<\/p>\n

ONDC cannot hope to compete with the massive reach that restaurants get through Zomato and Swiggy. Combined both companies have an active food delivery user base of close to 35 Mn and processed close to $2 Bn in GMV in the quarter ending September 2024.\u00a0<\/span><\/p>\n

From Delivery To Dining Out<\/b><\/h2>\n

But Daryani also believes that it\u2019s not just about food delivery.\u00a0<\/span><\/p>\n

Zomato and Swiggy are also eyeing scale in other verticals including <\/span>dining out and experiences<\/span><\/a>. Daryani urged restaurants to safeguard their dining business from aggregator platforms which could come for this segment next.\u00a0<\/span><\/p>\n

He warned that the restaurants will face the same challenges from these platforms in the future as they are facing in the food delivery segment.\u00a0<\/span><\/p>\n

Last November, Zomato <\/span>launched District as a separate app<\/span><\/a> for dining, live entertainment and ticketing. In response, Swiggy, which acquired restaurant reservations app Dineout in 2022, <\/span>rolled out Scenes<\/span><\/a> and is eyeing a wider play around experiences and ticketing as well.\u00a0<\/span><\/p>\n

Both consumer services giants are venturing beyond aggregation and delivery to owning a bigger piece of the restaurant and lifestyle experiences industry. Daryani questioned whether Zomato and Swiggy are actually helping the restaurant industry or hurting it.\u00a0<\/span><\/p>\n

\u201cWe need to find various alternatives to survive, sustain and thrive. They already have a very firm footing in the delivery business, and we can\u2019t allow them to get that firm footing in the dining-in business, because dining is the only place where we make money,\u201d <\/span>he added<\/span><\/a>.\u00a0<\/span><\/p><\/blockquote>\n

Even as restaurants continue to protest, Swiggy and Zomato are looking to expand Snacc and Blinkit Bistro to more cities. In fact, besides these giants, a number of new startups are eyeing the same space, which means Zomato and Swiggy are not about to slow down any time soon.\u00a0<\/span><\/p>\n

But Zomato CEO Goyal claimed that scaling Bistro up isn\u2019t the goal of this experiment. “It is to find a workable business model that the restaurant industry can replicate. India’s out-of-home food consumption has room to expand, and new service models like Bistro will help acquire new customers, benefiting the wider restaurant ecosystem.”<\/p><\/blockquote>\n

But for the NRAI, this is a reprisal for a decade-long battle against the increasing dominance of delivery platforms. This time around, the battle seems more existential.<\/span><\/p>\n

[Edited By Nikhil Subramaniam]<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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