Companies

‘Swiggy lying to restaurants for higher commissions’

SANGEETHA CHENGAPPA PRIYANKA PANI Bengaluru/Mumbai | Updated on January 11, 2018

Swiggy, like most food tech start-ups, is struggling to hit the road to profitability. - V Ganesan

Blog post says the firm plans to increase fee from 25% to an average of 30%

Disgruntled employees of food-ordering and -delivery platform Swiggy said in a blog post on Wednesday that the company’s 12,000 restaurant partners are being lied to, to squeeze out higher commissions.

The post, titled ‘Swiggy, a House of Cards’ on social networking site Tumblr, says the company plans to increase the current commission of nearly 25 per cent to an average of 30 per cent, in the future.

“This means, at least some of the restaurants will be paying 40 per cent commission, which will bleed them to death. Most of these businesses, which pay 40 per cent, will be the small guys because the big guys will never pay anything more than 20 per cent,” the blog said.

Stating that restaurant owners are also being cheated, the post added: “Swiggy recently took the best business zone in Bengaluru and started intentionally routing all the users to order from Bowl Company — the company’s own private label kitchen…. which directly hits at the heart of restaurants it partnered with to grow its business in the first place.”

“Maligning a company on social media has become easy for employees who are either fired or have performance issues,” said a food tech entrepreneur who wished to be anonymous. “A customer once wrote to me saying that if I did not give a discount, he will write negative reviews on social media,” he said.

While Swiggy claims it processes 4 million orders a month across eight cities, the blog post said that in June, order volumes were at 2.76 million. “How can that change suddenly?”

Those who wrote the blog felt strongly that the management team’s mistreatment of restaurant partners, employees and delivery boys, is because its mission is to build the company, sell it and make a quick buck.

Mounting losses

Founded in August 2014 by Nandan Reddy, Rahul Jaimini and Sriharsha Majety, Swiggy, like most food tech start-ups, is struggling to hit the road to profitability.

The start-up’s losses in FY2016 spiked to ₹137.18 crore from ₹2.12 crore in FY2015, while revenue in FY2016 was just ₹20.14 crore as per Registrar of Companies data from business research platform Tofler.

Backed by investors such as Naspers, Bessemer Venture Partners, Accel India and SAIF Partners India, Swiggy has to date raised $155.5 million in funding.

Reacting to the blog post, Swiggy in a statement said it has grown over the past few years on the back of strong support from its restaurant partners, employees, delivery executives, consumers and investors. “Our restaurant partners are at the heart of our success — our joint vision of providing a complete food-ordering and -delivery solution from the best neighbourhood restaurants inspire us. Our employees are the keepers of our soul… We are committed to winning together with all our stakeholders who we have engaged with, in complete transparency and integrity.”

Published on July 26, 2017

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