FHRAI Expresses Concerns Over Zomato and Swiggy's 10-Minute Food Delivery Services

The Federation of Hotel & Restaurant Associations of India (FHRAI) has voiced concerns about Zomato and Swiggy's recent venture into standalone 10-minute food delivery services. These quick-service apps, aimed at delivering food in a shorter time frame, have sparked significant controversy within the restaurant industry.

FHRAI's Criticism of the New Service

Pradeep Shetty, Vice President of FHRAI, has expressed alarm over the business model behind Zomato and Swiggy's introduction of these services. He argued that both companies, which were originally designed to function as neutral marketplaces, have shifted towards directly competing with restaurants by offering their own food products. This move, according to Shetty, disturbs the competitive balance, negatively affecting restaurant owners who already face financial pressure in the highly competitive food service industry.

Shetty mentioned in an interview with CNBC-TV18 that FHRAI has formally requested an urgent meeting with the Commerce Ministry to address these concerns, asserting that Zomato and Swiggy’s actions breach e-commerce regulations and give them an unfair advantage over traditional restaurants.

Backlash from the National Restaurant Association of India (NRAI)

The FHRAI’s criticism comes in the wake of similar discontent from the National Restaurant Association of India (NRAI). On the same day, NRAI President Sagar Daryani criticized the two platforms for exploiting their dominant market position. Daryani suggested that Zomato and Swiggy’s new business model violates the trust placed in them by the restaurant industry and damages the relationship between restaurants and the aggregators.

Daryani stated, “We have been backstabbed by Swiggy and Zomato in a way,” referring to the disruption caused by the 10-minute delivery apps. The NRAI has announced plans to approach the Competition Commission of India (CCI), seeking intervention to address what they view as monopolistic practices by Zomato and Swiggy.

Zomato’s Response to Allegations

Albinder Dhindsa, CEO of Zomato's quick-commerce platform Blinkit, defended the company’s actions, denying the allegations of unfair competition. Dhindsa took to the social media platform X to clarify the company’s stance on this issue.

In his post, Dhindsa emphasized that Zomato will not launch private food brands through its app to compete directly with its restaurant partners. He clarified that the 10-minute delivery service is operated through a separate team and a standalone app. Dhindsa further explained that no restaurant data from Zomato is being used for the new service, ensuring that the company’s restaurant partners are not directly harmed by the venture.

Commitment to Ethical Practices

Dhindsa highlighted that this approach will incur additional costs for Zomato, but insisted that maintaining ethical standards and keeping their promises to restaurant partners were more important than cutting marketing expenses. He stated that the new service is intended to benefit the entire food ecosystem, including restaurants, by increasing customer engagement and adding value to the industry.

Additionally, Dhindsa reiterated that Zomato's policy of not launching competing private brands on the Zomato platform remains intact. The new 10-minute delivery service, named Bistro, is a completely separate project and is not being incorporated within the main Zomato app. This distinction, according to Dhindsa, was crucial in preventing any conflict of interest between Zomato and its restaurant partners.

Potential Industry Impact

Zomato and Swiggy’s quick-commerce initiatives have created a ripple effect in the restaurant industry, sparking a larger debate over the role of aggregators and their relationship with restaurants. While the new 10-minute delivery services have gained traction among consumers for their speed and convenience, many restaurant owners worry about the long-term impact on their businesses.

Both FHRAI and NRAI have raised concerns about the growing influence of food delivery platforms on the local restaurant scene. The risk is that by offering their own products directly to consumers, platforms like Zomato and Swiggy may further edge out smaller restaurants, which could struggle to compete on the same terms. If these platforms continue to evolve into direct competitors to restaurants, it could alter the landscape of the Indian food service industry in the years to come.

Conclusion

The ongoing debate between food delivery giants Zomato, Swiggy, and the restaurant industry is far from settled. FHRAI, along with NRAI, is pushing for intervention from the government and regulatory bodies, while Zomato defends its position and business model. As the situation evolves, it will be interesting to see how these tensions affect the dynamics between online aggregators and the traditional food service industry, and what regulatory steps may be taken to resolve these issues.