As business plummets, food delivery platforms nudge restaurants to open with newfound goodwill – Moneycontrol

Restaurant News

Increase in commissions? No problem — that’s off the table. What about increasing the frequency of payouts? Of course.

Food delivery platforms, which not long ago held the upper hand because of the wider reach they provide, have softened their stance against restaurants by launching multiple steps to encourage them to get back online as business took a pounding after the outbreak of the coronavirus and the consequent lockdown.

Zomato and Swiggy have even offered to help on restaurants with improving hygiene standards to coax them to return to their platforms.

These actions have become critical because food delivery volumes have dropped by more than 40 percent in the past two weeks, according to industry estimates.

Swiggy has shot off mailers to its partner restaurants assuring them that there will be no increase in commissions it charges for each food delivery. Restaurants have also been promised payouts — money paid by customers to aggregators which in turn get passed on to restaurants  —  twice a week until the end of April 2020.  The normal practice for all these platforms is to do payouts once every week.

“There will be no increase in Swiggy’s fee/commission till the end of April 2020,” said the Bengaluru-based company in the mail, a copy of which Moneycontrol reviewed. Swiggy also assured additional visibility to those restaurants that have adopted hygiene standards it prescribes.

This is a dramatic shift in tactics by delivery platforms because until the outbreak of the coronavirus their conversations with restaurant partners centred on increasing charges from the start of the new financial year.

“Food delivery platforms have received a double whammy — one there is no supply as mostly restaurants are shut and two, demand has fallen drastically as people are keeping away from food cooked outside,” said an owner of a restaurant who is part of both the delivery platforms Swiggy and Zomato.

Zomato too has sent detailed mailers to its partner restaurants around safety measures to be adopted. It has advised restaurants to place hand sanitisers in prominent locations in kitchens and persuade all cooks and chefs to wear masks and check their temperatures. It even warned restaurant owners to refrain from uploading fake pictures.

Zomato and Swiggy have begun to prominently display these practices on their apps to give confidence to customers.

“Users on Zomato will soon see photos of your “Kitchen Hygiene”, along with photos on ambience, food on your Zomato listing. This helps them assess the hygiene and take a more informed call on ordering from your restaurant,” said the Gurugram- based company in a mail. Moneycontrol has seen a copy of this email.

Zomato and Swiggy did not respond to queries from Moneycontrol.

While these measures are aimed at encouraging restaurants to resume operations, problems are aplenty for restaurant owners themselves.

The National Restaurant Association of India, which was at loggerheads with Zomato till recently, told Moneycontrol that more than 90 percent of restaurants under its umbrella across the country are shut. These places have closed down not only because of fall in business, but due to a severe shortage of staff and disruption of supply chain of raw material.

“Getting curfew passes for so many of my staff, then ensuring that they can travel to the workplace is a huge challenge,” said an owner of a chain of restaurants in Mumbai.

“I agree that food delivery is an essential service, but now there are many more important things to take care of, like feeding migrant workers in distress.”

Food delivery platforms have a large chunk of their customers who are bachelors or stay in rented accommodations where there is no provision to cook. With maids too unavailable because of the lockdown, the problem might have aggravated.

Rohan Aggarwal, director at advisory firm Redseer, said online food platforms have demand coming in and they are trying to cater to this by remaining operational. If they can deliver food at home, people will not step out, he said, adding that they have a fleet that is enough to cater to the current demand, which is anyway low.

“But they need to utilise the fleet,” he said.

No deliveries mean no income for delivery agents, which in turn affects their dependents. Swiggy has launched a special fund to support its delivery partners, looking to raise Rs 10 crore through contributions from its employees and founders. Zomato is running a campaign named Feed the Daily Wager to support the vulnerable sections of the society.

Online food and grocery delivery was popular among the urban masses until it was disrupted by the 21-day nationwide lockdown announced by the Prime Minister on March 24.

After several rounds of negotiations, local state administrations identified food delivery as an essential service and offered to give delivery boys curfew passes to operate.

But the severity of the lockdown, which has stifled movement of people and goods, has caused restaurants to be shut. Scores of delivery agents left cities to return to their homes in rural India as assignments dried up.

“The delivery flow is still not back to normal and delivery agents are still being stopped in certain states,” said Aggarwal. “These issues will take at least a week more to normalise.”​

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