FHRAI raises concerns over Zomato, Swiggy's "private label" food delivery foray

The Federation of Hotel & Restaurant Associations of India (FHRAI) on Monday expressed "serious concerns" over Zomato and Swiggy's recent foray into the "private label" food delivery space, urging regulators to take "swift action" to address the growing worries related to data misuse, unfair competition, and food safety.

According to FHRAI, Zomato and Swiggy are now using their market dominance to directly compete with the very businesses they were meant to support.

In its statement, FHRAI said Zomato and Swiggy, which initially operated as platforms connecting restaurants with customers, have now ventured into the quick commerce space by creating their own private label food products.

"These platforms use restaurant data to create personalized offers and discounts, which in turn puts restaurants at a disadvantage, as they are essentially competing with their own information," the Association claimed.

It further said, the lack of clear regulations around the production and sale of these private-label products raises concerns about the safety and quality of food being delivered to consumers.

The Association said, the aim of raising this issue is to address the growing concerns about the misuse of restaurant data by food delivery platforms and the unfair competitive advantage these platforms now hold over restaurants.

"By leveraging data from restaurants, such as customer preferences and sales trends, Zomato and Swiggy can create personalized deals that directly impact the restaurant's business.

This not only threatens the livelihoods of small and medium-size restaurants but also raises questions about data privacy and consent," FHRAI said.

Pradeep Shetty, Vice President of FHRAI, said, "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.

These companies were originally designed to function as neutral marketplace platforms, connecting consumers with restaurants, not as direct competitors".

Last week, the National Restaurant Association of India (NRAI) had opposed "private labelling" by Zomato and Swiggy for quick commerce food delivery via separate apps, and said it will file complaints with "relevant regulatory authorities" and initiate legal action to prevent them from monopolising the market.

On Friday, Blinkit CEO Albinder Dhindsa, in a post on X, said that Zomato will not use its app to build Bistro, Blinkit's new 10-minute food offering, which is currently live across a few locations in Gurugram.

"Also, as @deepigoyal 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.

"This is going to be a significant additional cost to us, but ethics and sticking to our word mean more than anything else to us at Zomato and we are not going to give it up to save some marketing cost," the Blinkit CEO said in the post.

A response from Swiggy could not be obtained as the emailed query remained unanswered.