Food Delivery

With Swiggy’s IPO on the horizon, restaurants cry foul over a lack of transparency

Pranav Balakrishnan

June 19, 2024 | 10 Min Read

Swiggy is facing allegations of hidden fees and other unfair practices from restaurants in Bengaluru. Is there merit to these claims or are restaurants trying to extract better terms from the platform since it can ill-afford any disruptions this close to an IPO?

Key Takeaways

As Swiggy gears up for its IPO, it faces the challenge of balancing the imperative for better unit economics with maintaining its relationships with restaurant partners
Restaurateurs in Bengaluru have accused the platform of various unfair practices, from hidden fees to forcing them into discounting
A review of the restaurant dashboards of both Swiggy and Zomato shows that while the two collect similar commissions, Swiggy’s fees aren’t communicated as transparently
Swiggy also tends to rely on one-way communication of policy changes, further exacerbating the mistrust that already exists among restaurant owners

In early June, Vidyarthi Bhavan, a famous Bengaluru-based restaurant, wrote a letter to a local hotel association, Bruhat Bengaluru Hotels Association (BBHA), detailing issues it had with foodtech giant Swiggy. The letter, leaked to several media houses, including The CapTable, accused Swiggy of hidden charges, higher commissions than its rival Zomato, and forcing restaurants to participate in discount programmes without their explicit consent.

The BBHA, while not associated with the pan-India restaurant industry body NRAI, counts some of Bengaluru’s oldest and most iconic restaurants, including Empire Hotel, as members. When The CapTable reached out to PC Rao, president of BBHA, he expressed surprise that the letter was leaked. “We are currently collating inputs from all restaurants and will be sending a detailed letter to Swiggy,” he said.

Interestingly, the letter didn’t take equal issue with Swiggy’s arch-rival, Zomato. In fact, it praised the Gurugram-based company for charging lower commissions and being more transparent with the various charges it levies on restaurants.

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