NEW DELHI: Nearly a third of restaurants listed on food delivery platforms said they would stop using them due to rising commissions and lower profits, according to a report by economic policy think tank NCAER and investment firm Prosus.The report stated that 30% of restaurants surveyed wanted a reduction in the commission structure, with the average commission per order rising sharply from 9.6% in 2019 to 24.6% in 2023. However, larger restaurant chains were found to have greater negotiating power, enabling them to settle for lower commissions.
The report showed that meals delivered directly by restaurants are the most expensive for consumers. The average bill for restaurant-led home delivery stood at Rs 332, compared with Rs 302 for orders placed through food delivery platforms and about Rs 260 for dine-in meals. “Firms were asked whether they would stop using food delivery platforms, and 35.4% of platform restaurants said that they would do so. The reasons are high commissions, poor customer service, and not giving enough profits, orders, and customers,” the report released Thursday said.The study found that the average share of restaurant revenue from food delivery platforms increased from 22.1% to 28.8%, with small restaurants in Tier-3 cities deriving nearly a third of their revenue from such platforms. Despite the concerns, most restaurants continue to remain on platforms such as Swiggy, where Prosus in an investor, and Zomato as these apps provide visibility and access to a wider customer base.The report also mentioned Zomato’s recent announcement on sharing customer information with restaurants after obtaining user consent, stating, “It could potentially address privacy concerns and restaurants’ demand for more customer information…policy changes by one platform may also hopefully influence other platforms to change their behavior.” Currently, access to customer information remains limited by city type and restaurant sizes and 67% of restaurants reported that platforms shared only customer names.Separately, another NCAER report assessing the overall economic impact of the food delivery platforms showed that the sector has expanded rapidly. The gross value of output nearly doubled from around Rs 61,000 crore in 2021-22 to about Rs 1.2 lakh crore in 2023-24, even though the sector still accounts for a small share of the overall economy.
