Zomato and Swiggy had thus far looked to connect restaurants to end consumers, but their latest moves suggest they want to do a lot more than just that.
Restaurant owners have conveyed their displeasure after Swiggy and Zomato have launched their own private food labels in their 10-minute delivery apps. Blinkit has launched Bistro, and Swiggy has launched Snacc over the last month to cater to quick deliveries. But many of the dishes being delivered by these apps don’t specify which restaurant they’re coming from, implying that Swiggy and Zomato are making the dishes themselves and then delivering them to customers.
This has drawn the ire of the National Restaurant Association of India. “This is clearly an abuse of dominance. Swiggy and Zomato are taking unfair advantage of our data and entering our territory. We are going to take legal recourse,” said Anurag Katriar, trustee at National Restaurant Association of India (NRAI). “The NRAI views this as a clear case of misuse of private labels, infringing upon intellectual property rights under the Copyright Act. We are committed to pursuing all available legal remedies to safeguard the interests of the restaurant industry,” the NRAI said.
NRAI contends that Zomato and Swiggy partnered with them for years, and had access to their data and food ordering trends. But now that the platforms are extremely popular, they’re looking to create their own food brands and sideline the very restaurants which helped them build their businesses. The companies say that this has been happening in the two companies’ 10-minute delivery apps, which are serving food directly made by Zomato and Swiggy and not by third-party restaurants.
“We have no reason to not believe them migrating our customers to the products they sell as private labels on their apps. Be it data from a tea brand, biryani or momos,” Sagar Daryani, co-founder & CEO at Wow! Momo Foods and president of NRAI, said. “As long as these aggregators are okay working with restaurants and enable restaurants to go quick, we are absolutely fine with it. But we will not want to be demolished as an industry where they end up selling our similar products,” he added.
The creation of private labels is a common strategy of platforms to further grow their businesses. Companies like Amazon and Flipart have their own labels which they sell on their platforms, like Amazon Basics or Flipkart’s Marq. Platforms like Big Basket and Blinkit also have their own private labels which they sell on their platforms. In the physical world, most supermarket chains have their own labels which they sell from their shelves along with products from other companies. But restaurants might be right to be concerned about the entry of Zomato and Swiggy into the food creation space — with them owning the platforms, and with the wealth of data on India’s eating habits they’ve collected over the years, they could well end up eating the restaurant owner’s lunch.