Hotel association writes to Swiggy, Zomato to cut commission charges on takeaway services

The Federation of Hotel & Restaurant Associations of India (FHRAI) has written to Swiggy and Zomato, seeking a reduction in commission charges on takeaway services as the hospitality sector struggles to get their finances back in shape.

In a letter addressed to Zomato founder & CEO Deepinder Goyal and Swiggy’s co-founder & CEO Shriharsha Majety earlier this week, the association urged the online food aggregators to decrease the commission charges by 5% with retrospective effect from May 2020.

At present, the commission rates vary anywhere between 18-40% of the order value. The amount depends on different parameters like the size of the order and the type of restaurant. FHRAI has requested the reduced commission charges be implemented till the time restaurants are allowed to operate without restrictions.

“Due to the surging numbers of infections all over the country, the recovery process is going to be a long drawn out affair for the sector, co-existent with the increased focus on health, hygiene and introduction of preventive vaccine against the pandemic,” the association said in the letter reviewed by FE.

The dine-in segment that drives bulk of the revenues for the restaurant industry has been severely hit as consumers shunned non-essential movements and took to online food ordering. As business shrunk, many restaurants closed outlets to rein in costs and pivoted to a takeaway and delivery led model.

“In view of this significant business growth of the Food Service Aggregators (FSAs), we earnestly believe that being the co-travellers in the food business, the FSAs have an ethical responsibility to show solidarity with the hospitality sector,” FHRAI said.

Zomato recently said that the food delivery volumes in India have reached the pre-Covid peaks and the sector is expected to grow at around 15%-25% month-on-month for the foreseeable future.