In the midst of ongoing tensions with food delivery giants Zomato and Swiggy, the National Restaurant Association of India (NRAI) is advocating for more affordable food delivery solutions to stimulate growth in the industry. Sagar Daryani, NRAI’s president and CEO of Wow! Momo Foods, expressed concerns on Tuesday about the stagnation in the food delivery market, asserting that enhancing affordability is crucial for attracting more customers and revitalizing the sector.

The Need for Affordable Delivery Solutions

Daryani emphasized that the growth of food delivery services hinges on expanding the customer base. He stated, "To see real growth in this sector, we must focus on making delivery cheaper for consumers."

• Current Challenges: High commissions from aggregators are a significant barrier.
• Impact on Restaurants: Many new entrants are struggling to survive due to unsustainable costs.

High Commissions Are Hurting Restaurants

The NRAI continues to engage in a prolonged dispute with Zomato and Swiggy, accusing them of exploiting their market dominance. Daryani pointed out that the staggering commission rates—often reaching 30%—are detrimental to the restaurant ecosystem. He revealed alarming statistics: nearly 75% of new restaurants in the delivery space fail within a short period.

Daryani remarked, “If aggregators maintain these high commission rates, the delivery ecosystem is bound to collapse.” He believes that either the commission fees must be lowered, or restaurants should be granted access to customer data, which is currently controlled by the aggregators. "Without access to customer insights, our ability to thrive in this industry is severely limited," he added.

The Competition from Private Labels

A significant point of contention is the rise of private label brands like Zomato’s Bistro and Swiggy’s Snacc. The NRAI has raised concerns about these brands benefiting from pricing structures that allow them to undercut independent restaurants. Daryani argued, "These platforms face no commission pressures for their private labels, giving them an unfair competitive edge."

While the NRAI is not planning to launch its own delivery service imminently, discussions with both aggregators are ongoing to seek viable solutions to the current issues.

Ongoing Legal Challenges

Over the past year, the NRAI has pursued various legal avenues to address these challenges, including filing complaints with the Competition Commission of India and engaging in cases within the Delhi High Court. Recently, the NRAI’s appeal regarding mandatory service charges faced delays, with the next hearing scheduled for May 9 due to technical difficulties in the court’s virtual system.

In conclusion, the NRAI’s renewed push for affordable delivery options highlights a critical moment in the food service industry, as the reliance on high commissions and data control poses significant threats to the survival of independent restaurants. Addressing these issues is essential for fostering a more equitable market that benefits both consumers and restaurateurs alike.