After sitting down with the ecommerce retailers on the ‘deep discounting’ issue raised by the Indian retailers, it was the turn of the online food order delivery businesses like Swiggy and Zomato to be presented before the government almost on a similar charge. Only the complainants this time are the restaurant owners who feel their business is being taken away by these online food order and delivery companies, according to an Economic Times report.
Ramesh Abhishek, Secretary Department for Promotion of Industry and Internal Trade (DPIIT) is meeting with those from Swiggy, Zomato and the others. The similarities between the two cannot be missed, except probably that the two major players in the food order delivery businesses are Indian companies though some of their investors may be from overseas. Flipkart and Amazon are owned by foreign entities.
The issue faced by the restaurants can be a little different than the retailers with the online retailers. The going was good till they were getting orders through the app-based food order aggregators these hotels were quite happy. They were getting business without having to spend on promotions and more importantly, no capex on setting up restaurants and fixed costs on employing staff etc. They had to part with a certain commission to the food order delivery companies but that did not affect them much. It is when Swiggy and Zomato started developing their own cloud kitchens and diverted more orders to these that it started pinching the restaurants.
Their main complaint being conveyed to the government is that companies like Swiggy and Zomato used technology to study customer preferences of dishes from their restaurants and having them made through their private labels and offering discounts on them. The restaurateurs term this an unfair trade practice. They are approaching the government as organised bodies, Federation of Hotel & Restaurant Associations of India and National Restaurant Association of India.
It is understood that the government may take a more neutral stand here, asking both the sides to mutually sort their issues out and come to an understanding.
Swiggy and Zomato and others on this side are pointing out that they have provided employment to a large number of people and the industry must receive support from the government. They have their own set of recommendations to make to the government on this.