Restaurant owners of the city of Bengaluru have issued a dire warning to the food delivery platforms Swiggy and Zomato that if their complaint about high commission rates and other platform charges are not addressed, they are going to stop accepting orders from them from August 15. These restaurant associations have been discussing and negotiating with the food delivery companies for the last months and no agreement has been reached to settle these issues.
The restaurant bodies have pointed out that the present commission structure (which varies from 8% to 28% in revenue) and additional costs (advertising fees, payment gateway charges, and deductions for promotional discounts) are cutting into their profit margins. This is compounded by the increasing operating costs for restaurants that are struggling and the existing business model is becoming unsustainable for many. These high costs and low margins have left restaurants in a precarious position.
The restaurant associations are demanding that settlement reports provided by the delivery platforms be made more transparent. They especially object to discounting without notification from the restaurants to which they are making a profit, so that unexpected losses may result. They also want to recover lost orders that are canceled after the food is already done and automatic deductions due to customer complaints that are made, without any investigation of the incident. In addition, they are for dedicated relationship managers to be assigned to each restaurant and for contracts to be clearer and more comprehensible to facilitate communication and dispute resolution processes in the process.
In an attempt to resolve these problems, restaurant representatives have given Swiggy and Zomato a deadline of August 15 to respond to their concerns in writing. They say that if they don’t do so, thousands of restaurants that are on these platforms will be dropped and there will be a huge disruption in the online food delivery services for Bengaluru customers. In case of a boycott, the customers would lose access to numerous of their favourite restaurants they order from and then use the apps to order that food.
As time ticks down to the end of the week, it remains to be seen how Swiggy and Zomato will respond to the mounting pressure from the restaurant community. Both platforms have not come up with a resolution to the conflict but industry organisations are optimistic that they can find a solution before the deadline is close. The two delivery platforms and restaurant associations will be in constant communication throughout the day, and both parties will have to continue to try to resolve this increasingly heated topic.
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