500 Restaurants Stand-Up To Food Delivery Giants: Sign Petition Against Predatory Pricing, Market Monopoly

An online petition signed by around 500 small and mid-sized restaurant businesses has called upon the Competition Commission of India (CCI) and the Prime Minister’s Office (PMO) to take action against food delivery services such as Swiggy, Zomato, Uber Eats and Foodpanda for allegedly misusing their dominant position in an attempt to monopolise the market, reports The Economic Times.

The petition argues against the use of deep discounting by these companies, calling the practice ‘predatory pricing.’ It also lambasts the use of internal sourcing and in-house kitchens, calling these moves part of a plan to wipe out small restaurants.

“Unlike retail, FDI (foreign direct investment) restrictions are not applied on the restaurant sector or food service aggregators,” said president of the National Restaurant Association of India (NRAI) Rahul Singh.

He added that a roundtable discussion with all the four major companies has been scheduled for next week, where these issues will be discussed.

The petition has demanded that the CCI “put an end to unsustainable pricing by these companies, prohibition of cross-holdings of food services, delivery company to own or have a stake in any kitchen/restaurant, and appointing food regulators to ensure that a level playing field in not breached in the garb of cutthroat competition.”

Swiggy has set up an in-house kitchen called The Bowl Compay, while Zomato has a grocery-supplies company HyperPure. Swiggy has been accused of unethically funnelling demand to its own kitchen, while Zomato has been accused of forcing restaurants to purchase ingredients from its company, which is said to violate provisions of the Competition Act.

Zomato’s response to the story:

"At Zomato, we believe in providing the best services and experiences to our users; and endeavour to meaningfully help grow the businesses of our partners as well. Our platform lists more than 75,000 restaurants, of which a significant majority are small and mid-size restaurants. We have significantly expanded our online ordering and food delivery services and are currently present across 118 cities in India. We have been able to deliver long-term growth for our restaurant partners by connecting them with more users. Infact, a lot of our restaurant partners have been able to expand their operations since food delivery has helped them exponentially leverage the fixed and man-power costs. Discounts are merely a mechanism to encourage user participation and all our restaurant partners can choose to participate in a discounting campaign.

"With HyperPure, our aim is to provide organic and residue free fresh produce to all the restaurants at their doorsteps while helping them save on the purchasing cost. The service is only present in Bangalore currently and already has a quality breadth of restaurants. HyperPure has received a great reception so much so that our order list is bigger than our what we can currently service. It is helping restaurants save efforts of sourcing food ingredients from an otherwise unorganised market. A small to mid-size restaurant stands to save 10-15% in their monthly expenses on ingredients purchase. We don’t constrain the restaurants on our platform to associate with HyperPure, doing so will be completely against our ethics. Restaurants can choose the HyperPure services if they find them beneficial enough.

"Zomato’s prime objective is to contribute to the growth of the restaurant industry in the country, which we have been doing over the last decade with the help of our various services. We are discussing the matter with the involved restaurant partners to achieve an amicable solution, which would benefit all the parties in the ecosystem.”