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Swiggy’s ‘collection fee’ sparks dispute with restaurants


NEW DELHI: Swiggy’s decision to charge 2% collection fee on all orders starting December 20 is an “unwelcome distraction”, the country’s leading restaurant body said on Sunday.

The National Restaurants Association of India (NRAI), which represents over 500,000 companies across the country, also said restaurants will seek clarity from the food delivery platform in the coming days.

“December is supposed to be the best month of business for us; for Swiggy to unilaterally come up with this suddenly in peak season is definitely an unwelcome distraction,” said Sagar Daryani, vice president of NRAI.

Swiggy’s move is “nothing but a way of indirectly increasing commission costs”, alleged Daryani who is also founder and chief executive of Wow! Momo chain of restaurants.

Swiggy did not respond to ET’s email seeking comments till press time Sunday.

The platform, in an email to restaurant partners, said it will charge a standardised 2% collection fee on all orders effective from December 20. “This fee is for facilitating seamless customer payments on the Swiggy platform. Please note that this amount will be deducted from your payouts,” it read. ET has seen the email.


A Swiggy insider claimed such a fee is “a standard industry-wide practice” to facilitate smooth payments from customers on the platform, adding that restaurants that do not currently have a collection fee are being charged this amount.

Swiggy’s rival Zomato already charges a payment gateway fee.

The development comes before the big day of New Year’s eve. Last year, Swiggy and Zomato said they delivered a record 500,000-plus orders on New Year’s eve.

Restaurants have frequently alleged that commissions charged by the aggregators are steep. This has prompted many to explore direct deliveries to consumers. However, restaurants are not able to deliver on the scale and reach that aggregators enable.

“Costs of delivery are already higher than dine-ins, with commissions charged by aggregators at 25-30%,” said Riyaaz Amlani, managing director of Impressario Entertainment & Hospitality, which owns Social and Smoke House Deli restaurants. “Increasing this further directly hurts profitability,” he added.

Experts said aggregators could instead make use of data to improve unit economics.

“Smart menu engineering and catalogue optimisation will help to increase ticket sizes and that will improve unit economics for aggregators and restaurants,” said Karan Tanna, chief executive of food tech platform Ghost Kitchens. “This is the most appropriate and sustainable way to improve economies and optimise data, which is currently completely underutilised.”

He said aggregators sharing insights on how to engineer menus better, and how pricing can be improved for specific items, combos and add-ons could help boost unit economics.


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