Restaurants get nearly a third of their revenues from food delivery aggregators Zomato and Swiggy despite about 75% of them having direct ordering channels such as own app and website, social media connects or direct tele-calling to generate demand.
Over 85% of the restaurants have higher price tags on their online menu, compared with dine-in menu prices to recoup high aggregator commissions and discounts, said a recent report by JM Financial that surveyed more than 135 restaurants spread across top 10 cities.
“While, theoretically, the organised food services industry can survive without the presence of aggregators, practically that is unlikely to ever happen. Even some of the branded, chain restaurants mentioned that they have limited bargaining power over aggregators on account of the latter’s sheer size, customer loyalty and diversified supplier base,” said the report.
Restaurant industry association National Restaurant Association of India (NRAI), however, said these large incumbent aggregators are not indispensable. While aggregators have helped demand, there has been friction point over the past several years over their high commission rates that restaurants claimed eats into their profit margins.
“For the restaurant business, their contribution should not be more than 15% on an average, while QSRs and cloud kitchens largely survive on these food aggregators. There is a strong duopoly in the delivery space currently but survival, especially for small restaurants, is a challenge despite strong sales growth,” Anurag Katriar, founder at Indigo Hospitality and NRAI Trustee, told ET. “The ecosystem is so unhealthy that no one, neither aggregators nor restaurants are making profit, clearly indicating that the current terms needs to be reworked, which has been an ongoing process.”
Read more at: https://economictimes.indiatimes.com/epaper/delhicapital/2023/jun/20/et-brands/a-third-of-eateries-income-comes-from-delivery-apps/articleshow/101116910.cms
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