Shangrila, a Tibetan restaurant on Bengaluru’s Brigade Road, is 52 years old. Currently managed by Kunga, a third generation owner, the restaurant never needed advertising to attract customers. Rather, word of mouth did that job for no charge.
Then online platform for food delivery Swiggy came along eight years ago and started taking 24-25% of every order. Around six months ago, the restaurant stopped its association with the delivery platform.
Kunga says money wasn’t really the reason. It was how Swiggy treated the relationship. Nobody from the company ever came by to ask how the restaurant was doing.
Kunga’s is not the only food business in Bengaluru with a soured relationship with delivery platforms.
Restaurant owners across the city accuse both Swiggy and Zomato of charging high commissions and applying discounts and other hidden charges without prior intimation, let alone contractual agreements. They say that commissions and hidden charges cost them Rs 40-60 for every Rs 100 worth of orders.
Discontent over the charges levied by delivery platforms have been simmering among businesses for several months now. With the added pressures of the LPG crisis, it boiled over, prompting the Bangalore Hotels Association to call for a boycott of these platforms.
The threat of a boycott brought Swiggy and Zomato to the table for discussions with the association, held on August 6 and 7. For now, both delivery platforms have agreed to seek restaurant consent before activating promotions and relook into past campaigns that were run without approval. Although restaurant owners had initially announced a complete boycott from August 15, they later set an August 31 deadline for assessing whether their concerns have been resolved.
TNM met with restaurateurs from different parts of the city to understand how the allegedly predatory pricing and steep deductions by delivery platforms eat into their profits. While owners of legacy restaurants say an established customer base keeps them immune to the threats of delivery platforms to a large extent, newer entrants are forced to pay large sums to the platforms in commission and advertisement, while struggling to find a footing in the industry.
‘It’s never 30%’
Restaurants typically pay platforms a commission on orders generated through them. But the often cited 30% commission “is never 30%”, as Ananth Narayan, Bengaluru head of the National Restaurant Association of India, put it in an interview with ET Now. According to him, after commissions and discount contributions are taken into account, the effective burden can reach 40–60%.
PC Rao, honorary president of the Bangalore Hotels Association, agrees. He says the commission itself is only one component of the deductions that delivery platforms make. “There are a lot of other charges, such as advertisement fees, long distance levies, collection charges, and others. They also charge a commission on the goods and services tax (GST),” he says.
If a restaurant does business worth Rs 1 lakh through a delivery platform, Rao says, it may receive only Rs 40,000-45,000 after various deductions.
Meghna Vakada, managing partner of Barley and Grapes Cafe in Whitefield, explains the break-up of a business’ spending on delivery platforms. Commissions range between 20% and 30% per order. Additionally, she says, restaurants have to spend on banners, advertisements, and promotional campaigns within the apps. “You’re hardly earning anything unless you have a very high volume of orders,” she says.
Ibrahim*, the owner of a cafe in Fraser Town, says his establishment is listed on both Swiggy and Zomato but receives very few orders through them. He alleges that Swiggy asked him to pay Rs 50,000 with a promise of more than Rs 2 lakh worth of business through promotions. This would be in addition to the regular commission he owes them, making the arrangement difficult to justify, Ibrahim says.
The discussions should therefore shift, restaurant associations say, from the headline commissions to the total deduction delivery platforms make in an order.
The discounts nobody agreed to
When the platforms hike their commission, Rao says restaurants are informed and agreements are signed. However, the same transparency does not happen with discounts and promotions, he alleges. “They put up a price or discount by themselves.”
Several other restaurant owners also allege that delivery platforms often enroll them in discount and promotional campaigns without their explicit consent. The cost is subsequently recovered from their payouts.
Meghna says restaurants can also feel compelled to participate in promotions because of how visibility works on the platforms. The ranking algorithm pushes restaurants that offer discounts higher up the app, giving them greater visibility.
Meghna describes it as a “fear of missing out”. If one restaurant is offering discounts, she says, a neighbouring establishment too may feel pressured to do the same in order to not lose customers.
“If you offer a discount, the app will put you first in line,” Rao says, elaborating, “For instance, if I pay Rs 5,000 per week, when someone searches for ‘masala dosa’ on the app, my eatery will appear first.”
This can trap restaurants in extended commitments, he alleges. Rao adds that there have been instances when restaurants with low order volume agreed to run limited period promotional campaigns, but Swiggy and Zomato extended it beyond the agreed period without the restaurants’ knowledge.
The restaurant associations therefore demand that promotions should not be activated without prior written consent from the restaurant. They also oppose the automatic renewal of marketing agreements.
In its August 7 letter to Swiggy, the Bangalore Hotels Association lists several fees it wants removed, including for long distance, payment collection, restaurant cancellation, and delivery sponsored by restaurants, as well as premium offerings like Swiggy One.
The association also demands that only the agreed commission and applicable statutory charges be deducted from restaurant payouts and that service charges be calculated only on the food component rather than GST.
Breach of competition laws
The business practices of the delivery platforms have also come under legal scrutiny. Both Swiggy and Zomato have both been accused of breaching competition laws, based on an investigation by the Competition Commission of India (CCI) in 2022 after the National Restaurant Association of India filed a complaint.
These allegations also assume significance as several quick commerce platforms face an anti-trust case filed by the All India Consumer Products Distributors Federation (AICPDF), which represents 4 lakh distributors across the country.
In February last year, AICPDF filed an anti-trust case with the Competition Commission of India (CCI), accusing Blinkit, Swiggy’s Instamart, and Zepto of predatory pricing and calling for an investigation into the businesses.
Why restaurants stay anyway
Despite the steep rates charged by delivery platforms, they have become essential in the food business now, says the cafe owner Ibrahim. “That’s why it is easy for them to exploit new, small businesses,” he adds.
Most restaurants are not arguing that such platforms should be banned. For many, particularly newer restaurants and cloud kitchens, they provide access to a large customer base and a delivery network that would otherwise be difficult and expensive to build.
Meghna says that while her own restaurant does not primarily depend on deliveries, cloud kitchens and smaller outlets rely heavily on the platforms as a primary source of income.
This dependence is what gives the platforms considerable bargaining room, restaurant owners say.
Kunga, whose restaurant has operated for more than five decades, says his established customer base ensures a lesser dependence on delivery platforms. But that’s not the case for new restaurants, says Shahid*, who owns a restaurant on Museum Road. Besides already operating on low profits, having to give a significant portion of their revenue to the delivery platforms can substantially extend the time new restaurants take to become profitable.
The complaints appear more grave when viewed against the costs of running a restaurant. Restaurants have to pay for ingredients, staff, rent, utilities, cooking gas, and other operational expenses before they can make a profit. Rising input costs have further squeezed margins, Meghna says, with the LPG crisis due to the war in West Asia having had a particularly significant impact.
During the LPG crisis, she recollects, prices increased sharply, forcing some restaurants to shut down because they could not absorb the additional expense. Restaurants have since had to introduce additional charges in some cases to compensate for higher operating costs.
This means that a restaurant receiving Rs 450 or Rs 500 from a Rs 1,000 online order does not necessarily make Rs 450 or Rs 500 in profit. That amount still has to cover the cost of preparing and packing the food, pay staff, and other expenses.
Where the negotiations stand
On August 6 and 7, representatives of the Bengaluru Hotels Association, National Restaurant Association of India, Karnataka State Hotels Association, and Karnataka Bakery and Sweet Association met with officials of the delivery platforms, including Rohit Kapoor, the CEO of Swiggy’s Food Marketplace, Dine Out and Crew, and Aditya Mangla, the CEO of Zomato’s food delivery business.
The associations’ demands go beyond simply reducing commissions. They want restaurants to have control over whether their money is used to fund discounts; fresh consent for marketing agreements rather than automatic renewal; detailed payout statements that explain every deduction; and dedicated platform representatives who can address disputes.
The Bangalore Hotels Association has asked Swiggy to ensure that a designated point-of-contact visits each establishment at least once a month. It has also sought a weekly help desk at the association’s office for operational, accounting, and payout-related problems. Similar demands have been made to Zomato, including transparent service charges, relationship managers, and a weekly help desk.
The associations have also raised concerns about grievance redressal and the lack of direct communication with platforms. Kunga says one of the reasons he left Swiggy was his experience with delivery partners and the lack of interaction with the company. He had repeatedly raised complaints, but did not feel that there was adequate engagement from Swiggy’s representatives. With Zomato, he says, representatives at least visited the restaurant and asked about problems.
“If you’re calling yourself a business partner, you should actually interact with the businesses that you’re working with,” he said.
The dispute has also brought delivery workers into the conversation. The Karnataka App-based Workers Union (KAWU) has backed the restaurants’ concerns and has itself raised issues over deductions, payout transparency, and grievance redressal.
Delivery workers had threatened to join the proposed August 15 boycott if their demands were not addressed. KAWU president Mohammed Inayat Ali told The Hindu that platform companies earn money while exploiting different parts of the ecosystem, including restaurants, delivery workers, and customers.
The immediate standoff has eased after meetings between the restaurant associations and senior leadership of both platforms. Zomato has agreed to make restaurant-funded promotions opt-in and seek approval through a one-time PIN before such campaigns are activated. It has also agreed to examine complaints about past wrongful deductions on an outlet-by-outlet basis.
Swiggy has similarly agreed to seek restaurant consent before activating promotions and has agreed to refund charges collected for campaigns that were run without approval, according to the restaurant associations. The company is also expected to sign a memorandum of understanding with industry bodies.
The associations have consequently deferred the proposed boycott, with August 31 emerging as the next deadline for assessing whether the remaining concerns have been resolved. But the dispute over commissions is likely to persist.
For restaurants, the question is not simply whether a 20-30% commission is reasonable. It is whether, after every charge, discount, and promotional expense is accounted for, there is enough money left from an online order to recover the cost of preparing it and make a sustainable profit.
The restaurant industry’s push for alternatives reflects this concern. Associations are exploring direct ordering, commission-free logistics providers, and newer platforms such as Rapido’s Ownly, while Flipkart is also expected to enter the food delivery market soon.
For restaurants, more competition could mean more bargaining power. Until then, the platforms remain both a crucial source of customers and, in the eyes of many restaurant owners, a growing cost of doing business.
*Names changed to protect identities
Keshav Nair is a student interning with TNM.