The bleeding Resturants industry become threat on Food Delivery Apps in India. Now Resturants owner planning for direct delivery of food to their customers in nearby areas. If this is started by all restaurants then it will be a big Threat on Food Delivery Apps like Swiggy and Zomato. It will shrink their business and reduce profitability. This can also lead to thousand of job loss for their delivery executives and company employees. And this will not be a good sign for Swiggy and Zomato and their employees.
But why this is happening and why Resturants owners planning to delivery their food directly? The answer is, the restaurants across the country struggling with low business since corona crisis stared in India. Many scared to order food fearing infection and many doesn’t have money to order food due to drop in regular income. Apart from this, the large consumer for food delivery apps is working professional across the world. Now people are working from home and they have enough time to try different food themselves to save money. This all leading to a lower volume of food delivery business in India.
How Resturants want to attract new customers in this crisis time
Let me tell you that Resturants across indian forced to shut in first phase of lockdown started last year. Although it was open by the government after some times but then business was dropped to just 20-30%. Their business slightly improved around October and November 2020 but again dropped to same 20-30% when second wave of corona hit the India. This dual setback and uncertainty forced Resturants owners to think for a viable and sustainable business model. Now they are expiring possibility to increase the delivery volume and reduce the operating cost.
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Now Resturants owners want to attract their regular customer by offering them huge discount or combs like pay for one dish and get another free etc. But they can’t afford these offers on food delivery apps like Swiggy and Zomato. They can offer such deal to direct orders of customers by passing them delivery commission saved from delivery apps. This is win win situation for Resturants and their customers. But this is a big Threat on Food Delivery Apps in India.
What kind of commission food delivery apps charged in India
Food delivery Apps like Swiggy and Zomato charge upto 30% of order value from the Resturants. This is huge commission but earlier Resturant use to afford due to high volume of business. But low delivery order volume and takeaway making it difficult for Resturants to pay such high commission to delivery apps. Apart from this most of Resturants in India are not allowed for customers visit is also reduced profitability. Due to this rule the service staff of Resturants don’t have any job to do at present. Now Resturants owner want to use them for the delivery.
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The Threat on Food Delivery Apps already sensed by the leading players in this industry. They also trying to reduce the delivery commission on selected outlets which has significant business volume. This move from Swiggy and Zomato is not unified and this reduced commission given to selected outlets at present. Let me telly that these platforms have very high operating cost and their commission also add government tax which they charge from Resturants. The fix salary and commission to delivery agent reduce profitability of deliveries apps.
What industry experts recommending to delivery apps like Swiggy and Zomato:Threat on Food Delivery Apps
This is a very tough time for both restaurants and food delivery apps in India. Industry experts want both of them to survive and believe it will be good for delivery apps and restaurants business in long run. Eating each other business without considering long term vision is not advisable. If Resturants will start doing business in isolation then they will not be able to expand business and its delivery to a larger audience.
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Similarly if companies like Swiggy and Zomato will not understand the pain of Resturant owner and keep the same commission structure then they may not be able to surviver. Experts suggest them to workout differential products like slab wise commission based on business volume. Different commission slab for high and low order size. Also make differential pricing for order distance and time consumed for the delivery.
Experts want food delivery companies data scientists to dig data and design convenient products for their Resturant network. They also suggest them to make more transparent product which exposure cost to the Resturants owners to understand the commission charge by them. This will minimise Threat on Food Delivery Apps and let them survive with restaurants in this current pandemic situation.
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