Mumbai restaurateurs weigh in on capping fees charged by aggregators

Authorities in San Francisco in June passed a permanent cap on the fees that food delivery or aggregator apps are allowed to charge eateries The move spells relief for restaurants which have been forced to heavily rely on delivery platforms in the past yearA Mag St Toppings delivery personnel on his waySimilar moves are being planned in New York and Texas too Amid the clarion call for direct orders restaurateurs in Mumbai are looking to the authorities to recognise the crisisFood for thoughtAnurag Katriar ED amp CEO deGustibus Hospitality and president National Restaurant Association of India NRAI explains that of course restaurants would appreciate a maximum cap on total charges levied by aggregator apps ldquoBut you also need a variable structure wherein the commission depends on the average order value AOV This is something wersquove suggested to them a year agordquo he adds Recently the NRAI moved the Competition Commission of India CCI about alleged malpractices of food aggregator platforms ldquoThe issues raised by us include bundling of services datamasking exorbitant commissions price parity agreement deep discounting which is funded by restaurants exclusivity violation of platform neutrality and lack of transparencyrdquo Katriar reveals The restaurateur shares that eateries which use these platforms would like to have access to the data of consumers who are ordering food from them via the apps mdash which is not shared with them ldquoMoreover when you are in agreement with such platforms they shouldnrsquot start applying arbitrary charges We can discuss the moves together and progress otherwise the sanctity of the agreement is lostrdquo he points outNeed intervention to save eateriesldquoThe way things are going aggregators are expecting most of the bottom line expenses from restaurants making them unviable to a large extentrdquo points out Abhayraj Singh Kohli who runs several establishments including Grandmamarsquos Cafe and Tori He adds that most aggregators are now funded theyrsquore spending money on advertisements that no restaurant can afford and doling away discounts for customer acquisition ldquoIf this course isnrsquot corrected most small FampB entrepreneurs wonrsquot exist Itrsquos high time that such laws cap on commissions are put in place to protect restaurants and delivery kitchens from being exploitedrdquo he assertsA welcome movePankil Shah director and cofounder Neighbourhood Hospitality Pvt Ltd which operates Woodside Inn and The Pantry Cafeacute informs us that food aggregator apps levy different commissions based on a variety of factors mdash AOV number of outlets type of cuisine brand recognition etc ldquoFor us the range is between 18 and 23 per cent These high commissions make it impossible for most brands to survive their delivery business Even before the pandemic the duopoly of Swiggy and Zomato mdash backed by a seemingly neverending war chest mdash was able to dictate their commissions Most restaurants had no other choicerdquo The scenario worsened during the pandemic when restaurants couldnrsquot make up for the losses caused by these high commissions through dinein ldquoWith the dinein restrictions delivery remains a major part of our revenue So a decision to cap the charges would be welcomerdquo he adds While the importance of aggregators has increased sharing guestsrsquo data allowing restaurants to fulfil deliveries with inhouse teams and a commission structure that makes delivery profitable are some changes hersquod like to see from their endPrecedent for changeRestaurateur and delivery kitchen owner Gauri Devidayal whorsquos set up The Table Mag St Kitchen Miss T and Iktara among other establishments believes that the San Francisco decision sets a great precedent for the world ldquoIn India however one has to recognise that itrsquos not a levelplaying field for restaurants Aggregators levy different rates based on the volume they expect from your business As far as government intervention is concerned wersquore a little while away from thatrdquo she notes However the issue isnrsquot restricted to capping such moves can result in unbundling of the fees ldquoRight now a listing fee marketing fee logistics and tech charges get bundled up into one big fat commission for apps This will hopefully get unbundled For instance restaurants might want to list themselves on the app and not use their logistics or vice versardquo she elaborates Amid a standoff between restaurants and apps the orderdirect campaign has gained ground and Swiggy has responded with a change she informs us ldquoThe higher the order value the lower the commission so itrsquos not one flat percentage These changes are a step in the right direction I think how customers behave aggregators respond how the government gets involved and what restaurants do will impact what happens in the industry amid this crisisrdquo