The National Restaurant Association of India (NRAI) has decided to lodge formal complaints against food delivery giants Zomato and Swiggy, alleging unfair market practices related to private labelling and quick commerce. The association claims these activities breach marketplace neutrality and could monopolize the food delivery ecosystem, adversely impacting restaurant partners.
On Thursday, NRAI representatives confirmed plans to approach regulatory authorities, including the Competition Commission of India (CCI), to address these concerns. They also announced their intention to explore legal avenues to counter what they described as a growing imbalance in the food delivery market.
The issue revolves around Zomato and Swiggy’s venture into private labelling, where the companies deliver food from their in-house brands through dedicated quick commerce platforms. Zomato’s Blinkit Bistro and Swiggy’s Snacc are examples of such platforms that are being closely scrutinized. NRAI argues these initiatives give the platforms an unfair advantage over restaurants that rely on these delivery services to reach customers.
Industry stakeholders expressed apprehension about the potential impact of these ventures. By prioritizing their private labels, Zomato and Swiggy could allegedly sideline partner restaurants, reducing their visibility and sales. This, the NRAI insists, fundamentally distorts competition within the marketplace.
NRAI President Kabir Suri emphasized that restaurant owners are growing increasingly wary of these practices. He noted that by launching separate apps and quick commerce platforms, Zomato and Swiggy have essentially become competitors to the very restaurants they claim to serve. “This goes beyond being a conflict of interest; it endangers the survival of independent eateries,” Suri remarked.
Legal experts suggest that NRAI’s complaint might draw parallels to earlier cases where major tech platforms faced scrutiny for favoring their in-house products. The focus will likely be on whether the food delivery giants use data and algorithms to give undue prominence to their private labels, thereby disadvantaging other businesses.
Zomato and Swiggy have yet to issue detailed responses to NRAI’s accusations. However, a spokesperson for one of the platforms stated that the company adheres to all regulatory requirements and strives to maintain fairness across its services. Both companies are likely to defend their ventures as a diversification strategy meant to meet evolving consumer demands.
The entry into quick commerce food delivery marks a significant shift in the operations of these platforms. By delivering food through dedicated apps outside their traditional restaurant aggregator models, Zomato and Swiggy have tapped into the growing demand for instant, curated food options. While this move caters to a burgeoning segment of urban consumers, it raises fundamental questions about platform neutrality.
Restaurant owners in metro cities, where quick commerce apps are most active, have voiced particular concerns. Many claim their visibility has decreased, with customers being redirected to private labels or non-restaurant food offerings. The revenue loss for smaller establishments, which heavily depend on food delivery platforms, could be considerable if such trends continue unchecked.
NRAI’s decision to pursue regulatory intervention underscores a broader debate about the role of large platforms in maintaining a level playing field for all participants. With the food delivery market growing rapidly, balancing innovation with fairness has become a pressing challenge.
Market analysts believe this legal battle could set a precedent for other industries where platform providers enter direct competition with third-party sellers. The outcome may redefine how marketplaces operate in India, particularly as the country’s regulatory landscape evolves to address digital monopolies.
As NRAI prepares its complaint, it plans to rally support from affected stakeholders. Several restaurant owners have expressed their willingness to back the association in its efforts to curb monopolistic practices. This collective action reflects the widespread concern within the industry about the potential long-term consequences of unchecked private labelling.
For now, the food delivery ecosystem in India stands at a crossroads. The outcome of NRAI’s complaint and any subsequent legal proceedings could have far-reaching implications for restaurants, delivery platforms, and consumers alike. Whether regulatory bodies step in to impose stricter guidelines or endorse the current practices, the decision will likely shape the future of India’s dynamic food delivery sector.
The move by Zomato and Swiggy into quick commerce food delivery also raises concerns about data usage. Restaurants allege that these platforms have access to sensitive data, including consumer preferences, peak ordering times, and trending cuisines, which could be exploited to promote their private labels. This, they argue, gives the platforms an unfair competitive edge. NRAI intends to include these data misuse allegations in its complaint, urging regulators to investigate how proprietary information is being leveraged.
Consumer groups have also started to weigh in on the debate. Some have expressed apprehension about whether quick commerce platforms prioritize quality and safety in private-label food offerings. While restaurants are subject to strict quality checks and audits, it is unclear if private labels undergo the same scrutiny. This has raised questions about the accountability mechanisms in place for these emerging business models.
The controversy also highlights the growing dominance of platform capitalism in India, where a few large entities control access to vast consumer bases. Experts warn that unchecked expansion of private labels could eventually lead to reduced diversity in the food ecosystem. Smaller, independent restaurants could struggle to compete, which would limit consumer choices and diminish the vibrant culinary landscape for which India is known.
NRAI has called for greater transparency from Zomato and Swiggy regarding their algorithms and revenue-sharing models. The restaurant body argues that unless these platforms disclose how they allocate visibility and prioritize listings, it will be impossible to ensure fairness. A legal resolution in favor of NRAI could potentially mandate algorithm audits and increased oversight of platform practices.
This standoff also brings to light a deeper issue within the restaurant industry—its growing dependency on aggregators for business. Over the past decade, food delivery apps have transformed the way restaurants operate, shifting a significant portion of revenue online. However, as these platforms diversify into new ventures, the control they exert over the industry is being increasingly questioned.
Meanwhile, independent analysts point out that this battle could have far-reaching effects on the valuation of Zomato and Swiggy. Investors are closely watching the developments, as regulatory pushback could dampen the appeal of private-label ventures, impacting the revenue potential of these companies. Conversely, a resolution in favor of the platforms might embolden them to further consolidate their grip on the market.
As the case unfolds, it will test not only the resilience of India’s food delivery ecosystem but also the effectiveness of its regulatory framework in addressing emerging digital monopolies. The outcome could serve as a landmark moment, influencing policies for other sectors where platform neutrality is in question. For now, the industry awaits clarity as the NRAI and regulatory authorities prepare for what promises to be a pivotal confrontation.