Bengaluru: Hotel and restaurant associations in Bengaluru have warned that restaurants across the city could stop accepting orders through Swiggy and Zomato after August 15 if the food delivery platforms fail to address concerns over high commissions, discounting practices and payment deductions.
Restaurant bodies, including the Bruhat Bengaluru Hotels Association (BBHA), have decided to give both companies until August 15 to respond to their demands. The associations plan to submit a formal representation seeking corrective measures and a written response before deciding on further action.
Restaurants object to high commissions
According to the BBHA, commissions charged by food delivery platforms have become financially unsustainable for many restaurants.
BBHA President S. Subramanya Holla said the associations had asked the online aggregators to revise and streamline their commission structure.
He warned that if no resolution is reached by August 15, restaurants would boycott the platforms.
Restaurant owners claim commissions currently range from 8% to 28%, in addition to charges for advertising, payment gateways and app visibility. They argue that these deductions significantly reduce their earnings, particularly for small and medium-sized establishments.
Rising costs affecting businesses
Holla said restaurants do not operate with profit margins high enough to absorb commissions of up to 28%.
According to him, many establishments are forced to increase menu prices to offset platform charges. He claimed that to realise Rs 100 after paying commissions and other fees, some restaurants may have to increase menu prices by as much as 43%, ultimately passing the burden on to customers.
Restaurant owners contend that the current pricing model is affecting both business sustainability and affordability for consumers.
Associations seek greater transparency
The restaurant bodies have demanded greater transparency in pricing and settlement processes.
Their key demands include:
- Ending automatic payment deductions following customer complaints.
- Compensation when orders are cancelled after food has already been prepared.
- Detailed settlement statements explaining every deduction.
- Removal of one-sided contractual clauses.
- Appointment of dedicated relationship managers for restaurant partners.
They have also objected to discount campaigns and promotional offers being launched without the consent of restaurants, saying such practices erode profitability.
BBHA honorary president P.C. Rao said commissions, advertising costs, payment gateway charges and other deductions have made it increasingly difficult for restaurants to reconcile settlements and understand their actual earnings from each order.
He added that smaller restaurants have been the worst affected.
New delivery platforms offer alternatives
The protest comes as competition in India’s food delivery sector is expected to increase with the entry of new players.
Restaurant owners believe platforms such as Rapido’s Ownly, Flipkart’s upcoming food delivery service and ONDC-based platforms could emerge as viable alternatives to the Swiggy-Zomato duopoly if they successfully expand their operations.
Arun Adiga, Managing Partner of Bengaluru’s iconic Vidyarthi Bhavan, said the success of new entrants would depend on their marketing strategies, operational efficiency and delivery network, adding that greater competition would ultimately benefit restaurants.
Boycott not linked to new entrants
Holla rejected suggestions that the proposed boycott was prompted by the arrival of new food delivery platforms.
He said the association’s objective was to create a more competitive and sustainable marketplace for restaurants rather than replace one platform with another.
He noted that Rapido’s Ownly currently follows a zero-commission model, while Flipkart is expected to charge around 11% commission when it launches its food delivery service.
According to Holla, such commission levels are more acceptable, although new platforms would require time to build a customer base comparable to Swiggy and Zomato.
Final decision after August 15
Despite the warning, the BBHA clarified that it has not asked restaurants to immediately stop using Swiggy and Zomato, acknowledging that both platforms continue to account for the majority of online food orders in Bengaluru.
The association hopes discussions with the companies will result in a mutually acceptable solution before the August 15 deadline.
If no agreement is reached, restaurants across Bengaluru may stop accepting orders through the two platforms, a move that could significantly impact one of India’s largest online food delivery markets.
