As restaurants and hospitality bodies push for “Order Direct”, will Swiggy and Zomato make a fresh bid this festive season to reclaim space lost through off-boarded restaurants?
New Delhi: Food aggregator apps may have simplified the user experience to order food, but have drawn criticism from restaurants and the hospitality industry for eating up their revenue and jacking up food prices. This has led to the Order Direct campaign, where many restaurants have either logged off food delivery aggregators like Zomato and Swiggy, or are encouraging direct ordering by customers.
RESTAURANTS’ CONCERNS
Highlighting multiple benefits of “Order Direct” to restaurants, NRAI (National Restaurant Association of India) President Anurag Katriar told ET Now that a restaurant ends up spending almost 35% of their revenue between discounts, commissions and marketing on these platforms which they save when consumers order direct. Order direct also allows restaurants to keep the consumer data which is very critical in the long run, apart from establishing a direct connect between a consumer and the business, which Katriar feels is extremely critical in a service-oriented business.
Ruing that restaurants were finding it extremely difficult to make any money in deliveries while working with food aggregators, Katriar terms the “order direct” campaign an effort to take back some control of the “digital landscapes from the hands of the digital landlords.” Describing “order direct” a win-win situation where both sides engage in a direct interaction sans a faceless app, he is of the view that restaurants save a significant sum in absence of any aggregator’s intervention and are able to pass on direct discounts, provide complimentary add-ons or enable customisation of orders to customers.
However, he concedes that the biggest loss for an off-boarded restaurant is the inability to be discovered by new customers, which is extremely crucial for new brands. According to the NRAI, the order direct campaign has reduced delivery orders for restaurants onboard food delivery apps from 90% to 80%, with direct orders accounting for almost 20% of current business.
WHAT FOOD DELIVERY APPS SAY
Swiggy maintains that the number of restaurants being on-boarded on its platform outnumbers the outgoing restaurants. The platform points to its initiative Jumpstart 2.0, which was launched to support small and medium-sized restaurants during the pandemic by providing them aid worth Rs. 63 crores. Zomato told ET Now that most of the restaurants which exited its platform were the ones which had permanently closed during the pandemic, adding that 1.2 lakh new restaurants have joined them in the past one year.
However, both Swiggy and Zomato didn’t comment on claims of lower margins by individual restaurants and associations, who allege that it was costlier for them to operate while being on board the food delivery platforms. On 1st July, NRAI had informed the Competition Commission of India (CCI) against alleged anti-competitive practices by food delivery aggregators. To address concerns on customer data, Swiggy had also piloted an order direct service with a few restaurants which had engaged in discoverability of customers on their own.
WHAT’S NEXT THIS FESTIVE SEASON?
As the festive season approaches, all businesses hope to make up for losses of the past 2 years. With dining restrictions still in place at certain places, NRAI said that restaurants are trying to ensure a “pandemic-compliant conduct” to let both business and customer satisfaction co-exist. While individual restaurants are trying to rekindle an emotional connect with customers through “order direct”, aggregators continue to provide a convenient user interface with uniformity in service and delivery to customers. Between a click-on-the-app and a call to a restaurant, the customer is spoilt for choice.
