Restaurants Fight Back Against Delivery Giants

In a bold move to reclaim their market share, restaurants in India are gearing up to challenge the dominance of food delivery giants Zomato and Swiggy. The National Restaurant Association of India (NRAI) has announced plans to launch private label food through the government-backed Open Network for Digital Commerce (ONDC). This initiative aims to empower restaurants by providing them with greater control over their digital presence and customer data. As the groundwork for this transition begins, restaurateurs are optimistic about the long-term benefits, despite potential short-term challenges.

The Rise of Private Label Food

The introduction of private label food is a strategic response to the growing influence of Zomato and Swiggy in the food delivery market. These platforms have expanded their services, recently launching separate apps like Snacc and Bistro, which focus on quick food delivery. However, many restaurant owners feel that these apps primarily promote private label products, which are created using customer data gathered from their own businesses. This practice has raised concerns among restaurateurs, who argue that it undermines their ability to compete.

Anurag Katriar, a trustee at the NRAI, emphasized the importance of regaining ownership of digital platforms. He stated, โ€œBy partnering with ONDC, we will start the process of gaining back the ownership of our digital space.โ€ This partnership is expected to provide restaurants with access to valuable customer data, allowing them to tailor their offerings more effectively. While there may be initial hurdles in adapting to a new system, the long-term advantages could significantly enhance their operational capabilities.

The Impact of Quick Commerce on Restaurants

The quick commerce trend, characterized by rapid delivery services, has intensified competition in the food delivery sector. Zomato and Swiggyโ€™s foray into this space has sparked frustration among restaurant owners. They argue that the aggressive marketing of private label food through these platforms is detrimental to their businesses. The introduction of apps like Snacc and Bistro has further complicated the landscape, as restaurateurs feel that their customer data is being exploited to create competing products.

Zomato co-founder Deepinder Goyal has defended the Bistro app, asserting that it is not a private label and that its menus are based on publicly available snacking patterns. He claims that the app aims to expand the overall market for out-of-home food consumption. However, many restaurant owners remain skeptical, believing that the new service models primarily benefit the delivery platforms rather than the restaurants themselves.

Cost Implications and Logistics Control

One of the most pressing issues for restaurants is the high commission fees charged by Zomato and Swiggy, which can reach up to 35%. These costs significantly impact their profit margins and limit their ability to compete effectively. The NRAI has highlighted that working with ONDC will not only reduce these costs but also allow restaurants to choose their own logistics partners. This flexibility is crucial for restaurateurs who want to regain control over their delivery processes.

Katriar pointed out that the current system forces restaurants to rely on the delivery giants for everything, from customer discovery to food delivery. He stated, โ€œToday, Zomato and Swiggy do not allow us to use our own logistics capabilities to deliver food. With ONDC, this will change.โ€ By leveraging ONDC, restaurants hope to create a more sustainable and profitable business model that prioritizes their interests over those of the delivery platforms.

 


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