Credit: Special Arrangement
Having already locked horns with online food aggregators Zomato and Swiggy for unfair practices while drawing up contracts with partner restaurants, the National Restaurant Association of India (NRAI) is heading back to Competition Commission of India (CCI) for their private labeling (such as Bistro & Snacc) to foray into quick commerce on food delivery, procuring meals from third party commercial kitchens. Speaking to DH’s Sonal Choudhary, NRAI’s Vice President Pranav Rungta, dwelled on what is wrong with what restaurants consider the food delivery platforms’ overreach, their ‘data masking’, ‘deep discounting’ and how open network for digital commerce (ONDC) can offer a resolution to the ongoing strife.
How has CCI responded to your complaints against Zomator and Swiggy?
Our initial complaint, which we filed three and a half years back, with the competition regulator is still pending with its investigative arm. We had complained about various things like Zomato and Swiggy’s abuse of dominant position, their unilateral contracts and later on private labelling. However, unfortunately, it's a tri-party case, which is NRAI versus Zomato and Swiggy. There was an issue where NRAI was denied access to the unredacted version of the data.
After a lot of back and forth, we've gone to Delhi High Court to get the data from Zomato and Swiggy. So once that data comes out, we will be able to submit a reply to that and then CCI’s Director General will give us findings. This is going to take some time.
What are these data sharing issues NRAI has been talking about?
We don't know any preferences of the customers who are ordering from us, all this data has been hidden from us. Their common excuse has always been that restaurants will use the data to spam customers, however, we kept telling them restaurants want to use the data to understand their customers, same as they do. They got threatened that, given their high commissions, restaurants will do whatever they do to make sure that they get the next order directly from the customer.
However, they do share data with the likes of Dominos and others who use their in-house fleet. This means they can share the data but they choose not to.
Don’t you think that private labeling, discounting are very much part of business strategy for expansion?
For Zepto, it's a fair expansion strategy. For Zomato and Swiggy, no, because competition law specifically prohibits this. When you're a marketplace, which is what they are, you're not allowed to do private labels. Today, if you're a marketplace, and you also have your own brands, it is common sense that you will prioritise sales of your own brand, right? So while they're doing it to further their business, they're doing it because their investors are pressuring them to ape Zepto. But it's illegal and it is eating into our business.
The problem is, initially when this deep discounting started, Zomato used to burn all the money. They built user appetite for heavy and deep discounting. Now, all the restaurant discounts are funded by us. Unfortunately we are in an industry where we cannot absorb that much of a discount, so eventually either we absorb it or we pass it on to the customer. Now, when you're in such a competitive category, you cannot pass it on to the customer either. So it becomes our cost of doing business.
Why do you think that ONDC is a better alternative to the existing rapid delivery apps?
The beauty of an open network is that anyone can come in and participate, however, we don't have a clear messaging right now. No one understands the complexities of an open network. The technology and integrations it offers is great but the negative is that we're not able to go and market on it properly. However, the ONDC pilot has worked really well in Bangalore, now we need to replicate this in other cities to sort of make a dent. We’ve had multiple conversations with the ONDC team and put all our might behind it to make sure that there is a good value proposition for the customers. All the top brands today are already on ONDC through some network partner or the other. If someone comes in and is able to hold the gear and bring out another alternative app which helps us, we will happily back them.
What are your post budget thoughts?
At the outset the restaurant sector welcomes the bold move of the government to reduce the income tax outlay to citizens. We hope to see a decent fraction of this additional benefit coming into the discretionary spend industry like ours. However, our long standing demand for industry status has been overlooked for years.
We were also disappointed that our sector was not considered a labour intensive sector (like footwear and leather), when we are the second largest employer in the services sector, currently employing close to 9 million people directly.
Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.