Bengaluru restaurant associations have warned they will delist from Swiggy and Zomato starting August 15 over high commission rates and operational disputes. The standoff centers on charges that reportedly reach 28% and mandatory discounting policies. This could impact delivery volumes in a major market if the platforms and restaurant owners fail to reach an agreement on pricing and payment transparency.
Restaurant owners in Bengaluru, led by the Bruhat Bengaluru Hotels Association (BBHA), have issued an ultimatum to food delivery platforms Swiggy and Zomato. The associations have threatened to pull their establishments off these apps unless specific grievances regarding commission structures and business practices are resolved by August 15.
Impact on Restaurant Margins
The core of the conflict lies in the commission rates charged by delivery platforms, which association members state can vary significantly, reaching as high as 28% in some instances. Restaurant owners argue that when combined with additional costs for advertising, payment gateway fees, and app-based marketing, these charges leave very little profit. According to the BBHA, some business owners have resorted to increasing menu prices by as much as 43% just to retain a net amount of ₹100 after all platform deductions. This practice directly affects the final price paid by consumers and can lead to lower order volumes.
Demands for Operational Changes
Beyond commission rates, the industry groups are pushing for major changes in how these platforms handle daily operations. Restaurant owners are calling for an end to automatic deductions made for customer complaints and are demanding compensation for orders that are cancelled after the food has been prepared. Transparency in settlement statements and the removal of what they describe as one-sided contract clauses are also among their primary requests. Furthermore, there is significant pushback against discount campaigns that are applied to restaurant menus without the owner's explicit consent, as these campaigns often come at the expense of the restaurant’s own profitability.
Market Competition and Future Monitorables
The food delivery landscape in India is currently seeing increased activity, with new services like Rapido's entry into the space and upcoming launches by players like Flipkart. While some new models, such as zero-commission or lower-commission structures (around 11%), are being discussed, the associations acknowledge that Swiggy and Zomato currently hold the largest customer reach in Bengaluru. This makes a complete delisting a difficult decision for many restaurants.
For investors, the key update to track will be whether the platforms choose to renegotiate their commission agreements or adjust their merchant policies to avoid a service disruption. Any major shift in commission structures could impact the take-rate or profit margins for these platforms in the region. Conversely, if no agreement is reached, the potential reduction in restaurant partners in a major city like Bengaluru could affect the service availability and overall delivery volume for both Swiggy and Zomato.