Amid, pandemic food aggregators Zomato and Swiggy face massive losses and are now making exclusive deals with restaurants to improve their profit. However, it is disrupting the already strained relationship between these food delivery players and restaurants. Furthermore, it situation may play a significant role for Amazon, who has recently joined the market.
Food delivery players are evoking the Majeure clause that frees eating joints from joining any other food aggregator. They are bringing these changes in both local restaurants as well as national chains.
Zomato and Swiggy are likely to Lose Business to NRAI, and Amazon.
These recent changes came at the time Amazon entered the food delivery services in Bengaluru. Amazon’s food delivery network is most likely to expand the other cities across India in upcoming weeks, and the exclusive contracts by Swiggy and Zomato are most likely to make it easier for Amazon.
Even though Amazon joined the food delivery market in 2020, it was planning for it since mid-2019. The company was looking forward to launching it initially on Diwali 2019 and then in early 2020.
Meanwhile, NRAI (National Restaurant Association of India) is also working on a food delivery platform with as many as 6 lakh food joints and eateries at the time of its launch. It includes restaurants and hotels already listed in Swiggy and Zomato. Since the restaurants are not happy with the terms of the significant food delivery players, NRAI also assured to the bodies that they won’t work on the same line as them. Restaurants organizations have accused Zomato and Swiggy that they are eating up all the margins by increasing various tech charges as well as changing the programs without even consulting the partners.
Restaurants and Chains are Walking Out on Zomato and Swiggy
Many chain restaurants like Fatty Bao, SodaBottleOpenerwala (1), and several others are walking out on the food aggregators. Many have decided not to renew their contracts in response to their private plan.
Other popular food joints like A2B, Truffles, Pista House, and more have decided to follow suit. Notably, other similar platforms like cloud kitchen and eat.fit are following the same approach as Swiggy and Zomato.
Chetan Rampal, Partner at Olive Group of Restaurant, said that the online ordering is highly influential by a single brand with excellent customer relationship. Hence, Olive Group of Restaurants don’t want to tie to only one food delivery platform and choose to be available for all customers.
In the previous year, restaurants exclusively tied-up with Zomato, or Swiggy had a 30% account from them. These deals also elevated the company cost and were only after the direct discounts. Many of these contracts are currently under negotiation under different terms. They crack most transactions by providing partner body an assured monthly payment, fewer commissions, more visibility along with only one-time boarding fees.