Bengaluru Restaurants Threaten Swiggy & Zomato Boycott

Restaurant owners in Bengaluru are warning that they may stop accepting orders through food delivery platforms Swiggy and Zomato from August 15. The Bruhat Bengaluru Hotels Association and other restaurant groups have demanded that the platforms address their concerns over high commissions, discounts, and other deductions.

The restaurant associations have sought a written response from Swiggy and Zomato, calling for greater transparency in commissions and payouts. They argue that the mounting deductions are eating into their already thin profit margins, making it difficult for them to operate.

According to S. Subramanya Holla, president of the Bruhat Bengaluru Hotels Association, restaurants are currently paying commissions ranging from 8 percent to 28 percent. He claims that these charges are unsustainable and ultimately push up menu prices for customers. Holla also alleges that restaurants sometimes have to raise menu prices by as much as 43 percent just to recover platform commissions.

The restaurants have demanded that the platforms stop offering discounts without their consent and provide transparency in advertisement charges, payment gateway fees, and other deductions. They have also sought compensation for cancelled orders after food has already been prepared and detailed settlement reports.

PC Rao, honorary president of the Bengaluru Hotel Association, has alleged that Swiggy's unscientific deductions are causing heavy losses to restaurant owners. He claims that restaurants earning Rs. 1 lakh through the platform are often left with only around Rs. 40,000 after commissions, discounts, and other deductions.

More than 1,000 hotel and restaurant owners across the city have threatened to pull out of the apps starting August 15. However, Holla has clarified that the association is not asking restaurants to immediately abandon Swiggy and Zomato, given their large customer base. Instead, they want greater competition in the market.

The growing dissatisfaction has encouraged restaurants to explore other options. The government-backed Open Network for Digital Commerce is positioning itself as a lower-cost option, while newer players such as Rapido have announced plans to enter the food delivery market with a lighter commission model. Even Flipkart is set to enter the food delivery market, which could provide more options for restaurants and customers.

The standoff between restaurants and food delivery platforms is a significant issue, with many restaurants relying on these platforms for a large portion of their business. If the issues are not resolved, it could lead to a significant change in the way food delivery works in Bengaluru.

The demands of the restaurant associations are reasonable, and it is essential for the food delivery platforms to address their concerns. The high commissions and deductions are eating into the profit margins of the restaurants, making it difficult for them to operate. It is crucial for the platforms to provide transparency in their commissions and payouts and to work with the restaurants to find a mutually beneficial solution.

In conclusion, the threat of a boycott by Bengaluru restaurants is a significant issue that needs to be addressed. The food delivery platforms must work with the restaurants to resolve the issues and find a solution that works for both parties. If not, it could lead to a significant change in the way food delivery works in Bengaluru, with restaurants exploring alternative options and customers potentially facing higher prices or reduced services.