© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
The entry of Zomato and Swiggy into the 10-minute food delivery segment has sparked concerns among restaurant partners, who fear private labelling by the food aggregators. The issue took centre stage at a town hall organized by the National Restaurant Association of India (NRAI) Wednesday, where restaurants also flagged the involvement of the food aggregating giants in the dining-in space. The NRAI said it now intends to build on an ongoing Competition Commission of India (CCI) investigation stemming from its 2021 petition, while advocating for alternatives to Zomato and Swiggy, such as the Open Network for Digital Commerce (ONDC).
First, Zepto’s CEO Aadit Palicha announced the launch of Zepto Café, a 10-minute fresh food delivery app, on December 11. Unlike traditional aggregators, Zepto Café does not list restaurants or kitchens – users simply select items like coffee or samosas, which are delivered from nearby third-party commercial kitchens within 10 minutes.
Around the same time, Zomato-owned Blinkit and Swiggy were also breaking into the 10-minute food delivery market. On December 6, Blinkit launched Bistro on the Google Play Store, followed by a rollout in select Gurugram locations on January 10. Swiggy, meanwhile, expanded its earlier product Bolt into a separate 10-minute food delivery app called Snacc, launched on December 31.
“With strategically located kitchens and highly optimized processes, Bistro ensures your food reaches you piping hot (or refreshingly cold) in record time,” Bistro’s app description reads. Like Zepto Café, neither Bistro nor Snacc list restaurants – they directly sell fresh food items made in third-party kitchens. “So, the model works on two simple premises. One is that this serves restricted last miles. So, just for example, it serves roughly within anything up to two kilometers. And the second thing is that it is the same menu,” said Rohit Kapoor, CEO of Swiggy Food, to analysts on December 3.
Restaurant partners worries
Restaurant partners argue that Blinkit’s Bistro and Swiggy’s Snacc essentially operate as private labels, selling food prepared in third-party kitchens under their own brands. Sagar Daryani, President of NRAI and CEO of WOW! Momos, told The Indian Express that Bistro and Snacc are creating an uneven playing field for restaurants.
“They are getting products made from third-party commercial kitchens and selling them under their own private label. They have all our data – nothing stops them from migrating a customer who is ordering a samosa or a chai or a biryani or a momo from Zomato to Bistro and maybe at a better price because they don’t have the pressure of high commissions,” Daryani said.
Restaurant partners have also accused Zomato and Swiggy of engaging in private labelling by sourcing bulk orders from commercial kitchen operators and marketing them as home-cooked meals under their respective brands, Everyday and Daily.
Counter by aggregators
In a letter to restaurant partners, Zomato CEO Deepinder Goyal said Bistro is not an existential threat to the restaurant industry. “Bistro is not a ‘private label’ or ‘Zomato kitchen.’ In the past, I have expressed that Zomato as a restaurant-aggregator will never compete with its own restaurant partners, unlike players such as Amazon who sell their own private labels on Amazon,” Goyal said.
“Zomato has fully backed this commitment by never opening a physical restaurant and will NOT use Zomato as a distribution channel for kitchens that we do. Bistro is a separate app, and its menus are curated using publicly known snacking patterns. The Bistro team has no access to data that would create an unfair playing field,” he added.
“Even at 1,000 outlets, Bistro would barely be 0.5% of the market… India’s out-of-home food consumption has room to expand, and new service models like Bistro will help acquire new customers, benefiting the wider restaurant ecosystem… Also, I don’t think everything will move to 10 minute delivery. Gourmet restaurant food has its own space, and customers don’t need a gourmet pizza in 10 minutes and neither is that possible as far as we know,” Goyal said.
Restaurants’ objection to dining-in platforms
The entry of Zomato and Swiggy in the dining-in space has also irked restaurants, who have argued that aggregators are charging commission on reservations and attracting customers through deep discounting.
“In delivery, there’s some service involved. In dining-in, there is no service involved. They’re just bringing the customer to you. They have zero role to play in the entire experience of the customer. So why should they charge? Today, they are charging 3-5 per cent, tomorrow they’ll make it 7 per cent and 10 per cent and 15 per cent. You can’t trust them – they have just done lip service all these years and haven’t really walked the talk,” he said.
Daryani emphasised the need for more players in the market and added that in the last 6-9 months in Bangalore, roughly 20 per cent of the deliveries were made through ONDC. “We feel there is a very strong need for various alternative channels. ONDC could be one of them… but with this whole duopoly play, we are getting sandwiched,” he said.
What next
In 2021, NRAI had filed a complaint with the CCI against Zomato and Swiggy, accusing the two platforms of private labelling, data masking, and imposing unfair terms on restaurant partners. It argued that these practices restrict competition, create market entry barriers, and exploit the platforms’ dominant positions.
In April 2022, CCI found merit in investigating these allegations, particularly regarding platform neutrality, private labels, and price parity clauses, and ordered a detailed investigation.
“The CCI investigation is still on. There were media reports that the CCI has found some violations, but we haven’t got a copy of it,” Daryani said. According to him, NRAI plans to update their CCI petition with more recent complaints.
