Top industry associations slam Zomato, Swiggy over private label food delivery

New Delhi:  The Federation of Hotel and Restaurant Associations of India (FHRAI) and the National Restaurant Association of India (NRAI) have reiterated serious concerns over online food aggregators Zomato and Swiggy’s recent move to enter the private label food delivery business.

The FHRAI, which is the third largest hospitality association in the world, pointed out several issues, including unfair competition, misuse of restaurant data, and potential risks to food safety.

The NRAI, representing over five lakh restaurants — an industry valued at Rs 5.69 lakh crore — said that private-label food delivery undermines the principles of fair competition and poses a significant threat to the viability of thousands of restaurants across the country.

The FHRAI plans to meet the Ministry of Commerce officials to discuss these concerns and push for regulatory action to ensure fair practices in the food service industry.

“We are meeting with the Commerce Ministry very soon and have requested an expedited appointment to discuss this serious issue. The actions of platforms like Zomato and Swiggy represent a direct violation of established e-commerce regulations,” said Pradeep Shetty, Vice President of FHRAI.

Shetty noted that these companies were originally designed to function as neutral marketplace platforms — connecting consumers with restaurants — and not as direct competitors.

By introducing and selling their own food products, they undermine the very essence of a marketplace model, creating an uneven playing field that disproportionately harms restaurants, said the association.

According to the FHRAI, by leveraging data from restaurants, such as customer preferences and sales trends, Zomato and Swiggy can create personalised deals that directly impact the restaurant’s business.

Sagar Daryani, President of the NRAI, said that Zomato and Swiggy “have all our data which they do not share with us. For us, there is complete consumer masking”.

This strategy not only “cannibalises the business of restaurants that rely on these platforms” but also raises serious concerns under the Copyright Act and related laws, the NRAI said.

In addition, the industry bodies also raised concern over food safety standards applied to these private label products.

The hotel associations have urged regulators to take swift action to address the growing concerns related to data misuse, unfair competition, and food safety in the wake of these new developments in the food delivery market.

Meanwhile, Albinder Dhindsa, CEO of Blinkit, said as Deepinder Goyal (CEO of Zomato) has always said, “Zomato will never launch private brands on the Zomato app to compete with its restaurant partners”.

“This still holds true. Which is why this service is not being built within Zomato (the organisation which runs the brand, or the app). This is a standalone team, with a standalone app – and no Zomato restaurant data has been used. We will not even use the Zomato app to market Bistro,” he posted on X social media platform.

–IANS