The war between restaurants and delivery platforms is heating up. The National Restaurant Association of India (NRAI) has expressed its perturbation over the way food delivery platforms are dictating terms related to pricing, commissions and customer engagement, making it challenging for many restaurants to maintain profitability. The NRAI has called for a fair e-commerce policy that ensures a level playing field between restaurants and delivery platforms.

Since the Covid-19 pandemic, the restaurant industry has undergone a significant transformation. Before the pandemic, deliveries accounted for only 10-12 per cent of a restaurant’s business. Today, that figure has surged to 40-50 per cent, presenting both opportunities and challenges.

While platforms like Swiggy and Zomato are viewed as valuable partners in the evolving food delivery landscape, the duopoly they have established is increasingly causing strain on restaurateurs. The high commissions imposed by these platforms significantly erode profit margins, making it challenging for many restaurants to sustain their operations. Moreover, the pressure to offer substantial discounts in order to maintain visibility and attract customers on these platforms is proving to be an unsustainable practice, Sagar Daryani, Vice President of the NRAI, told businessline.

While consumer masking is a major concern, online food aggregators increasingly launch their own private labels using customer data from restaurant partners, creating an uneven playing field.

Restaurants no longer have access to their customers’ data or contact details, making it difficult to track and understand customer preferences. “For example, a restaurant doesn’t know if a regular customer has shifted from ordering idli to vada or dosa. This lack of transparency prevents businesses from adapting their menus to better meet customer demands,” he said.

Call for transparency

The NRAI is calling for greater transparency in customer data and protection from unfair competition. “We need an e-commerce policy that promotes fair competition,” Daryani said. “Aggregators should be partners, not competitors and there should be no data masking. Customers who order from a specific restaurant should belong to that restaurant, not just the platform.”

Also, the association has urged the central government to reinstate input tax credits under the goods and services tax (GST), a benefit previously available under the value added tax (VAT) regime. “If we were allowed GST input credits, we could potentially open 12 stores for every 10, creating more jobs and contributing to government revenue,” he said. The NRAI is actively engaging with finance ministers across multiple States to advocate for this change and is hopeful that it will soon be considered by the Fitment Committee.

Daryani stated that the NRAI supports service charges, highlighting that they help ensure fair distribution of earnings across all employees, from chefs to housekeeping staff. He noted that a portion of the charge is used to cover operational expenses, such as crockery and cutlery breakages. Additionally, a part of the funds is set aside for employee emergencies, promoting a more compassionate work environment.

The NRAI represents the interests of the restaurant industry across 24 cities, encompassing over 5,00,000 establishments, from single-restaurant owners and kiosk operators to major chains like Domino’s.

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