After the National Restaurant Association of India (NRAI), another leading industry body has now raised concerns about the foray of Zomato and Swiggy into quick-commerce private-label food delivery with the launch of Bistro and Snacc, respectively. The Federation of Hotel & Restaurant Associations of India ( FHRAI) has accused aggregators Zomato and Swiggy of violating “established e-commerce regulations” with the launch of these private label food delivery apps. The industry body said it is set to meet the Commerce Ministry on the issue. Earlier, NRAI said it is looking at legal remedies and may also approach the Competition Commission of India on this issue.

In a statement, 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. 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.”

Misuse of data

The industry body has said that it is alarming that these aggregators will be leveraging on years of worth of proprietary data collected from restaurants including customer preferences, order history, and sales trends to develop and promote their own branded products. “Restaurants are excluded from access to this data, making it even more challenging for them to compete. This creates a dangerous environment for small and medium-sized enterprises and raises significant ethical and legal concerns around the misuse of sensitive data,” Shetty added.

FHRAI has also raised concerns about whether food safety standards are being enforced to make these private label food products. “While restaurants are subject to stringent safety regulations, there is no transparency regarding whether the same standards are being enforced for products sold by these platforms. The lack of fairness and a level playing field exacerbates the challenges faced by our members, making it difficult for them to survive, let alone thrive, in this competitive landscape. This not only risks consumer trust but also threatens the reputation of the entire restaurant industry,” Shetty added.  

Published on January 11, 2025