In India, restaurants have a love-hate relationship with online food delivery platforms

In India, restaurants have a love-hate relationship with online food delivery platforms

  • Indian online food delivery platforms have reportedly been contributing 15%-20% annually towards the growth of food court businesses in malls of India.
  • Previously, the restaurant association asked food aggregators — including Zomato and Swiggy — if they are making consumers ‘discount addicts’ disguised as customers ‘saving’ through online orders.
It appears the relationship between Indian restaurants and the country’s online food aggregators such as Swiggy and Zomato can range from sour to sweet – depending on where you choose to dine.

Several prominent malls in India have witnessed an increase in business and profits due to online delivery platforms including Swiggy and Zomato, ET reported, citing mall owners.

According to New Delhi’s Select Citywalk Mall, business at food establishments at the mall’s food court has been growing at 15%-20% annually. The food court reportedly makes 300,000 deliveries a month via online food platforms.

On the other hand, India’s restaurants lobby recently accused the online food delivery majors of ‘eating into their business.’ Last month, small restaurants filed a complaint with the country’s anti-trust regulator, the Competition Commission of India (CCI) against deep discounting practices adopted by Zomato and Swiggy, accusing aggregators of getting consumers addicted to discounts.

According to a Bloomberg report, Zomato, Swiggy and Foodpanda invests nearly half a billion dollars in last two years on discounts. For example, Zomato has been running a 50% discount deal with many of its partners over the past four months. And Swiggy, which raised $1 billion, and entered the unicorn club, is also targeting deals in competition with Zomato.

One fast food chain owner told Business Insider India it had listed on online food aggregator platforms for the sake of deliveries, and not discounts. He added that the restaurant “doesn’t believe in discounts.” According to him, the discount strategy doesn’t necessarily impact customer loyalty, as people are likely to end up at their preferred restaurants.

While an official from the restaurant association stated that even though online food aggregators have brought restaurants closer to customers, it is important to note that no one sells at a loss just to attract customers and create dominance.

On the flip side, online food aggregators contend that their approach is just designed to increase customer reach.

“Discounts are merely a mechanism to encourage user participation as we advance our services. Our discounts and promotional schemes are carefully designed keeping in mind the best interest of all the parties in the ecosystem,” a Zomato spokesperson told Business Insider.

Deepak Zutshi, vice president for leasing at Select Citywalk told ET that there is no such conflict between malls and food aggregators Swiggy and Zomato here, the focus is on on-time delivery without compromising on customer experience.

Stiff competition

There’s no denying that food tech players in India have been in heated competition, battling on several fronts such as pricing and quality. According to the latest survey by Redseer Consulting, Swiggy has been the most trusted brand among Indians, leaving behind Foodpanda, UberEats and even Zomato.

Defending its discount strategy, Zomato has argued that it is only “working towards achieving a balance of user experience, restaurant growth and operational efficiency."

Regardless of who ranks up in the battle, one thing is certain: At least in the foreseeable future, the diners win.

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