Swiggy, owned by Bundl Technologies Limited, is set to introduce a 2% collection fee for restaurants, mirroring its competitor Zomato’s move. Swiggy’s collection fee, aimed at facilitating seamless customer payments on the Swiggy platform, has sparked discontent within the restaurant community. The decision to implement this collection fee on all orders starting December 20 has been criticized by the country’s leading restaurant body as an “unwelcome distraction.” As customers, the impact of this fee may eventually be borne by us.
Hike in Swiggy’s Collection Fee Sparks Concerns
The National Restaurants Association of India (NRAI), representing over 500,000 companies nationwide, expressed discontent, stating that restaurants will seek clarity from Swiggy in the coming days. Sagar Daryani, Vice President of NRAI, denounced Swiggy’s move, calling it an “unwelcome distraction” during what is supposed to be the peak business month. Daryani, who is also the founder and CEO of Wow! Momo chain, alleged that Swiggy’s collection fee is a method of indirectly increasing commission costs. In an email to restaurant partners, Swiggy informed them about the standardized 2% collection fee on all orders starting December 20, citing it as necessary for facilitating seamless customer payments on the platform, with the amount deducted from restaurant payouts.
Swiggy’s Collection Fee Hike Comes Amid New Year Eve’s Rush
A Swiggy insider defends the 2% collection fee, asserting it as a standard industry-wide practice to facilitate smooth customer payments on the platform. The source claims that restaurants without an existing collection fee are now subject to this charge. In contrast, Swiggy’s rival Zomato already imposes a payment gateway fee.
This development coincides with the approaching New Year’s Eve, where Swiggy and Zomato previously reported delivering a record 500,000-plus orders last year. Despite restaurants frequently criticizing the steep commissions from aggregators, many struggle to match the scale and reach provided by these platforms for direct deliveries.
Riyaaz Amlani, Managing Director of Impressario Entertainment & Hospitality, which owns Social and Smoke House Deli restaurants, highlights the challenge. He notes that delivery costs are already higher than dine-ins, with aggregator commissions ranging from 25-30%. Amlani emphasizes that further increases directly impact profitability. Experts suggest that aggregators could leverage data to enhance unit economics instead.
Success in the Food Delivery Landscape
Karan Tanna, CEO of Ghost Kitchens, emphasizes that smart menu engineering and catalogue optimization are crucial to increasing ticket sizes, benefiting both aggregators and restaurants. Tanna believes this approach, focused on improving unit economics, is the most appropriate and sustainable. He suggests that aggregators sharing insights on menu engineering, pricing strategies for specific items, combos, and add-ons can significantly enhance overall unit economics.