On Sunday, the country’s prominent restaurant association expressed displeasure, labeling Swiggy‘s decision to impose a 2% collection fee on all orders from December 20 as an “unfavorable distraction.”
The National Restaurants Association of India (NRAI), representing over 500,000 companies nationwide, also mentioned that restaurants would be seeking clarification from the food delivery platform in the days to come.
“December is supposed to be the best month of business for us; for Swiggy to unilaterally come up with this suddenly in peak season is definitely an unwelcome distraction,” said Sagar Daryani, vice president of NRAI.
Daryani, the founder and chief executive of Wow! Momo chain of restaurants, claimed that Swiggy’s action is “merely a means of indirectly escalating commission expenses.”
As of the press time, Swiggy had not responded to an email requesting comments.
In an email addressed to restaurant partners, the platform conveyed its decision to implement a standardized 2% collection fee on all orders, starting from December 20.
“This fee is for facilitating seamless customer payments on the Swiggy platform. Please note that this amount will be deducted from your payouts,” it read.
According to an insider from Swiggy, such a fee is considered a “common industry-wide practice” aimed at streamlining customer payments on the platform. The insider further mentioned that restaurants without an existing collection fee are now subject to this charge.
Zomato, a competitor of Swiggy, already imposes a payment gateway fee.
The news comes ahead of the significant event of New Year’s Eve. Last year, Swiggy and Zomato reported delivering a record 500,000-plus orders on New Year’s Eve.
Restaurants have often accused aggregators of imposing high commissions. This has led many establishments to consider direct deliveries to consumers. However, restaurants face challenges in matching the scale and reach facilitated by aggregators.
“Costs of delivery are already higher than dine-ins, with commissions charged by aggregators at 25-30%,” said Riyaaz Amlani, managing director of Impressario Entertainment & Hospitality, which owns Social and Smoke House Deli restaurants. “Increasing this further directly hurts profitability,” he added.
Experts suggested that aggregators could leverage data to enhance unit economics instead.
“Smart menu engineering and catalogue optimisation will help to increase ticket sizes and that will improve unit economics for aggregators and restaurants,” said Karan Tanna, chief executive of food tech platform Ghost Kitchens. “This is the most appropriate and sustainable way to improve economies and optimise data, which is currently completely underutilised.”
He mentioned that aggregators providing insights on optimizing menu engineering and refining pricing for specific items, combos, and add-ons could contribute to enhancing unit economics.
