Restaurants are changing their business models by reaching out directly to the customers through websites and social media and skipping the delivery aggregators like Zomato and Swiggy altogether.
This sudden change of heart comes at a time when businesses have been hit due to second wave of COVID-19 driven localized lockdowns. As such restaurants are looking at new ways to reach out directly to their valuable customers and to boost sales of course.
A report in ToI highlighted that restaurant owners alleged they currently have to pay over 30% of the total order value to online food tech giants for delivery, discovery and discounts. But senior executives at these companies said they charge around 20% commission, plus taxes.
To skip aggregators altogether means money saved. Riyaaz Amlani, CEO and MD at Impresario Entertainment & Hospitality that runs Social, Smokehouse Deli and Mocha among others, told ToI that they are currently paying around 42% to aggregators for discovery, delivery and discounts. “When we deliver directly, the margin is much better and the average order value 2x to 3x higher.”
Several restaurants revealed that direct deliveries currently account for 30% of the orders, from a minuscule proportion a year ago. However, senior executives at food-tech companies claimed that the aggrieved parties are restaurants that have a high dependence on dine-ins. Rahul Singh, Founder of Beer Café, said that on the flip side, while they believe that the aggregators need to be more business friendly, one can’t deny the role they have played in creating a robust distribution channel and driving up volumes for the restaurants.
Gauri Devidayal, managing committee member of the National Restaurant Association of India (NRAI), at a virtual session organized by the industry body on Thursday, highlighted that saving on commissions is key to the survival and thriving of their business. “Also require servicing an increased radius of delivery, and therefore having the potential for higher revenue. Right now, we seem to be restricting ourselves to the limits put on us by the aggregators,” she said. “In the last one year, we have seen the potential for going well beyond this, and reap the benefits. We have a long way to go. This is not going to be an easy process.”
According to NRAI, the online food delivery business is estimated at Rs 25,000 crore. Aggregators contribute to 6% of the total restaurant business in India. The restaurant industry has raised concerns that a higher dependence on delivery could eat into their margins as they pay high commissions to aggregators.