Restaurants likely to fight back as food ordering apps plan commission hike

There could be yet another war brewing between restaurant owners and aggregators as food ordering apps are believed to be planning an increase in commissions, restaurateurs feel. However, both Swiggy and Zomato have denied such plans.
 
While restaurants are trying to confirm the rise in commissions, they feel they might have to stop using these services altogether if there is an increase.
 
Business Standard has learnt that aggregators Swiggy and Zomato might be looking at increasing their commissions by 5 to 10 per cent. At present, aggregators can charge between 5-40 per cent commissions from restaurants listed on their platforms.

 

“We have heard about this (increase) from some of our members but neither of the aggregators has approached us directly. We have now sought this information from a larger section of our members and, depending on the feedback, we will decide our next course of action,” said Anurag Katriar, president, National Restaurant Association of India (NRAI).
 
The aggregators however, refuted the claims. “Swiggy denies that there has been any unusual increase in commissions for any specific restaurant partner base. Commissions are worked upon at an individual restaurant level and are in line with factors like average order value, delivery costs and other costs that are incurred. Every contract is renewed as per a pre-decided time frame and all terms and conditions, including commissions are mutually aligned with the restaurant partner. This is nothing but business as usual in a marketplace such as ours,” said a Swiggy spokesperson.

 
Zomato also denied increasing commissions. “That is untrue. We are not raising commissions for restaurants.”  Zomato further said it follows a different payment method for delivery partners and they are not charged a commission. The  commission increase would apply to restaurant partners.
 
The previous year was a stormy one for restaurant aggregators and the NRAI, as they were engaged in a public war of words over aggregators’ deep discounting programmes. The NRAI had also taken issue with high and uneven commission charges, arbitrary terms and conditions, lack of transparency, customer data masking, aggregators developing their own brands based on customer data, and non-transparent ways of ranking restaurants on their platforms.

 
No consensus was reached at a meeting held in September.
 
“As far as NRAI is concerned, we have made it clear to both aggregators that the delivery commission has to be transparent and based on certain measurable metrics like Average Order Value and total volume of business. However, as things stand today, the margins in the business don’t give us any scope for upward revision of commission rates to aggregators,” added Katriar.