Ahmedabad Restaurants To Stop Taking Orders From Swiggy To Protest High Commissions

India’s Uber and Ola drivers have been going on strike for a while now, but this might be that first time that its restaurants are going on strike.

The Gujarat Hotel and Restaurant Association has declared that they will not accept orders on Swiggy in Ahmedabad starting from Friday. The association is unhappy with the 22 percent commission that Swiggy charges on its orders, and are demanding that Swiggy fix what they call are “unreasonable demands.”

swiggy revenue loss 2017

The Association of Restaurants had earlier met with representatives of Swiggy and Zomato to discuss their concerns. While Zomato’s representatives asked for more time to rethink their proposal, Swiggy reportedly refused to give in. This appears to have prompted the restaurants to decide to boycott Swiggy.

Tensions between restaurants and food delivery platforms have been simmering for a while. Just last week, 500 of India’s small restaurants had come together to speak out against what they had claimed were the anti-competitive policies of food delivery companies like Zomato and Swiggy. They’d signed an online petition which had said that “companies have been continuously found to misuse their dominant position with the aim to wipe out small and medium enterprises… food delivery companies use deep-deep discounting, in-house kitchens and internal sourcing to build their own businesses at the cost of the restaurants.”

The claims are remarkably similar to those made by striking Uber and Ola drivers. Just like cab hailing drivers had been made to join ride hailing platforms with low initial commissions and high earnings, restaurants too had been wooed into joining food delivery platforms with similar promises. And just like with Uber and Ola, as food delivery companies have gained a foothold in the market, they’ve steeply hiked their commissions in order to profitably run their businesses. 

Restaurant owners, like cab drivers, aren’t too happy with the change. Many restaurants now earn the bulk of their revenues from these delivery platforms, but high commissions charged by delivery platforms eat away into their profits. They’ve now responded in the only way that can — through a strike. Luckily for them, they have more leverage than cab drivers did — the food delivery market is somewhat fragmented with 4 large food delivery companies around in Zomato, Swiggy, Foodpanda and UberEats; cabs are a virtual duopoly with just Uber and Ola running operations. It remains to be seen if restaurants will be able to muscle their way into delivery platforms lowering their commissions, but one thing is clear — the seeds might just be being laid for a protracted standoff between India’s restaurants its newly-minted food delivery startups.