The Federation of Hotel and Restaurant Associations of India and the National Restaurant Association of India have again raised serious concerns about the recent entry by online food aggregators Zomato and Swiggy into the private label food delivery business.
FHRAI, claiming to be the third-largest hospitality association in the world, has pointed out several issues-one being unfair competition, followed by the misuse of restaurant data, and another one, potential risks to food safety.
The NRAI, which represents over five lakh restaurants — an industry valued at Rs 5.69 lakh crore — said private-label food delivery undermines the principles of fair competition and poses a significant threat to the viability of thousands of restaurants across the country.
It intends to meet the Ministry of Commerce officials on these issues to get regulatory action to ensure that practices in the food service industry are fair.
We are meeting with the Commerce Ministry very soon and have requested an expedited appointment to discuss this serious issue. The actions of platforms like Zomato and Swiggy represent a direct violation of established e-commerce regulations," said Pradeep Shetty, Vice President of FHRAI.
These companies were originally designed to function as neutral marketplace platforms — connecting consumers with restaurants — and not as direct competitors, Shetty said.
By selling their own food products and marketing them through the platform, they are actually killing the marketplace model. They are killing the restaurants with this kind of unfairness, said the association.
By accessing the data from restaurants such as preferences of the customers and sales trends, Zomato and Swiggy can offer deals that are targeted and impact the restaurant's business directly, says the FHRAI.
"They have all our data which they do not share with us. For us, there is complete consumer masking," said Sagar Daryani, President of NRAI.
This strategy, apart from "cannibalising the business of restaurants which rely on these platforms," also raises serious concerns under the Copyright Act and related laws, the NRAI said.
Besides, the industry bodies also raised concern over food safety standards applied to these private label products.
The hotel associations have urged regulators to take swift action to address the growing concerns related to data misuse, unfair competition, and food safety in the wake of these new developments in the food delivery market.
Albinder Dhindsa, meanwhile, CEO Blinkit said as CEO of Zomato Deepinder Goyal have always said; "Zomato will never launch private brands on the Zomato app to compete with its restaurant partners".
This still holds true. That's why this service isn't being built inside Zomato (the organisation running the brand, or the app). This is an independent team with an independent app-and no restaurant data from Zomato has been used. We won't even use the Zomato app to market Bistro," he posted on X social media platform.
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