Swiggy, Zomato must learn to coexist with restaurants
It is indeed ironic that delivery vendors for food outlets and restaurants should be hauled up before the Competition Commission of India by the businesses they are supposed to be partnering and benefiting. But that is exactly what has happened. The National Restaurant Association of India has alleged a host of ‘monopolistic practices’ by online delivery chains Zomato and Swiggy and demanded that the fair trade regulator initiate a probe. Among the various ‘anti-competitive’ practices alleged include forcing restaurants to give deep discounts if they want to continue being listed. This is hurting normal physical footfalls in restaurants and making businesses unremunerative. Further, these food aggregators are known to charge high commissions on a per-order basis, and they have been opaque with delivery and customer data.
Two major developments have swung the pendulum away from food and restaurant services, in favour of the delivery aggregators. First, the lockdowns over the last 15 months have shut families up at home, and ensured that the only way to eat an alternate meal is by ordering in via online delivery. Second, the food delivery aggregator business, because of the huge investments involved, has seen the smaller players pushed out, leaving only the big cats—Zomato and Swiggy.
Who can compete with a Zomato, which is in the process of raising over Rs 9,000 crore through an IPO? Meanwhile, smaller but competitive players like Scootsy have been swallowed up by Swiggy. It is therefore necessary that the Competition Commission should step in to ensure that the restaurant and food businesses don’t shut down because of unfair and monopolistic practices by online delivery chains. For the likes of Zomato and Swiggy too, there must be a realisation that they depend on the F&B industry for growth and profits, and if they squeeze the latter too hard, it will amount to killing the golden goose. In the longer term, the answer lies in gradually restoring restaurant dining. Food parcels at home cannot replace the joy of an evening out with the family; and hopefully it won’t be long before restaurants and home deliveries learn to coexist as before.