In a very big move, Swiggy has started charging customers a fee for restaurants that have declined to pay the commission that the food delivery startup has issued.
This report comes as information from two people who wish to stay anonymous and are aware of the development. According to the sources, the restaurants that have refused to pay the commission are among the popular restaurants, with maximum demand from customers.
Charging for delivery of foods is a common practice in American startups, but this is a problem that food delivery services in India have been facing for most of the year. Meghana Foods, Corner House Ice Cream and Truffles Ice and Spice in Bengaluru have refused to pay Swiggy a commission and are considered among the top restaurants in the city.
According to a report by LiveMint, one of the sources said, “Initially Swiggy was delivering for free for these restaurants, which is not sustainable in the long term. It is a kind of situation where you cannot let go of these restaurants either because they have huge demand.”
Earlier this year, restaurants were dropping out of services like Swiggy and Runnr because of the high rate of commission that had to be paid, so this really shouldn’t come as much of a surprise to anyone. Swiggy charges an average of 15% from restaurants per order and the number can go as high as 25% for some establishments.
“Many established restaurants with a higher focus on dine in, or having their own model for home delivery are not dependent on food delivery platforms. These restaurants may consider them (delivery companies) only like a logistics partner and not encourage commissions for bringing in business,” said Sreedhar Prasad, partner, e-commerce and start-ups, at KPMG, India.
Unfortunately for Swiggy, letting these restaurants go could see a drop in their overall transaction volumes and it could also spell trouble for other services of the same kind. According to LiveMint, Swiggy declined to comment on this development, but keep watching this space for more updates.