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Tag: food business during pandemic

  • Why Zomato and Swiggy are accused of Anti Competitive practices?

    The Restaurants around the country have been complaining about the monopoly that is created by the Food aggregators Swiggy and Zomato. Zomato has been getting ready for their IPO launch and this could create a potential threat to their listing or even can affect their stock prices after the listing. However, in this article let’s look at why the food aggregators are accused of anti-competitive prices.

    Food delivery Platforms – Latest News
    The main reason Why Restaurants are complaining against Food delivery platforms
    What are the Problems faced by Restaurants?
    Response from the Food Aggregators
    The possible outcomes
    FAQ

    Food delivery Platforms – Latest News

    The National Restaurant Association of India (NRAI) has approached the regulator for competition in India with regards to Swiggy and Zomato. The Restaurant Association has accused the food delivery startups of anti competitive prices in the industry.

    The restaurant association had approached the CCI (Competition Commission of India) as the restaurants in the country were affected due to the competitive prices charged by the food delivery startups in the country.

    The restaurants were forced to rely on these startups in order to run their businesses as lockdowns were implemented in different places in the country. They have also filed a case against the startups on 1 July 2021 and added that they have an adverse effect on the competition in the restaurant industry.

    The main reason Why Restaurants are complaining against Food delivery platforms

    The association has conveyed that the restaurants have been complaining against the food delivery startups in regards to the massive discounts that the startups provide to customers which in turn are affecting the business of the restaurants. There has been a conflict between the restaurants and the food aggregators regarding this.

    The association has stated that the food delivery startup companies are trying to create a monopoly in the industry and have been charging commissions from the restaurants. The restaurants have also stated that the food aggregators are not providing them with the data of the customers.

    Anurag Katriar who is the president of NRAI has stated that they have been in constant communication with the food aggregators for the past 15-18 months in order to find a solution to the problems faced in the industry. However, they were not able to come to a solution regarding the problems despite all their efforts with the food aggregators.

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    What are the Problems faced by Restaurants?

    The restaurants have been reporting certain problems that they are facing with the startups since 2018 and some of the major accusations made by the restaurants association in India are providing discounts.

    The association has stated that the food delivery startups have been forcing the restaurants in order to provide discounts in order to let them stay listed on their mobile applications, the startups have been hiding the customer details from the restaurants and are collecting the preferences and the data of the customers and storing it for their personal use.

    The food aggregators have forced the restaurants to use their delivery services in order to complete the order and they are forced to pay huge commissions in order to maintain their listing on the mobile applications.

    Response from the Food Aggregators

    The Food aggregators Zomato and Swiggy have not officially provided any comments regarding the concern that is taken by the restaurant association towards the competition regulator. However, the association has stated that they had been constantly communicating with the startups for the past 15 – 18 months in order to find a solution.

    The association has also conveyed that the efforts taken by them have failed and the startups have not cooperated in resolving the issue and that is one of the major reasons for them to approach the CCI.

    In the earlier studies conducted by the CCI, the food aggregators have conveyed that in regards to masking the data of the customers is done as they are maintaining the privacy of the customers and would not want the data to be leaked outside. The aggregators had also stated that the details are used to provide better and quality services to the customers.

    The possible outcomes

    The next step can be that the CCI may take the case up and investigate further into the concern that is mentioned by the National Restaurant Association of India or maybe even not take it into consideration as a research was conducted into it previously.

    The NRAI has stated that they are working towards developing a mobile application in order to resolve the issue that is faced by the restaurants. They are working towards developing their own food aggregator app which would avoid all the problems faced by the restaurants.

    The association has conveyed that the mobile app is under development and would be ready to launch in the next two months and added that the back-end team is working towards the development of the mobile application.

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    Conclusion

    However, whatever steps that are taken by the CCI or the NRAI the end customers and the consumers would be affected. The customers will have to pay a higher price and would not be able to enjoy the discounts that are offered by the current food aggregators and they will have to face poor delivery services as well or even pay huge amounts for the delivery of their food.

    FAQ

    What is a food delivery aggregator?

    The food delivery aggregators offer access to multiple restaurants through a single online portal and they collect a fixed commission of the order, which is paid by the restaurant.

    How much commission does Zomato charge from restaurants?

    Swiggy and Zomato obtain 22-25 percent on order value from their restaurant partners.

  • How Zomato Survived the Pandemic-A Case Study

    Life, as we know, ended with the advent of 2020. It ushered in a new and scary era by introducing us to COVID-19. This puzzle remains unsolved even after toils by the best minds in the world. We now talk about life before and after the pandemic.

    Nothing remains untouched, and one of the most affected is the food business, particularly food delivery. Zomato is the forerunner in this industry in India. And it is only apt that their business performance is seen as an example.

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    Zomato—Before Pandemic
    Zomato—During Pandemic
    Zomato—Now
    Zomato—Steps Taken For Continued Business
    Zomato—Ventures
    Zomato—FAQ’s
    Zomato—Conclusion

    Zomato—Before Pandemic

    Zomato had reported a revenue of $192 million on a loss of $277 million in the financial year 2018-19. Then, in 2019-20, it doubled its earnings (revenue) reporting levels of $394 million on a loss of $293 million.

    Zomato acquired competitor Uber Eats in January 2020 gaining market share to increase GMV by 108%. In figures, the GMV increased from $718 million in financial 2019 to $1.49 billion in the financial year 2020.

    But as COVID-19 gained pace in the country, India responded starting a lockdown in March. The food delivery GMV (Gross Merchandise Value) was at an all-time low, reducing by 80% in the last week of Match 2020 (comparing with GMV at its peak in mid-February 2020).

    Zomato—During Pandemic

    In June 2020 quarter, Zomato had a revenue of $41 million on a loss of $12 million. These figures show the evident effects of the COVID-19 pandemic sweeping across India. But a positive impact was that the burn rate was reduced. It was expected to stand under $1 million and by July 2020 the monthly revenues started showing a steady rise reaching 60% of pre-COVID levels.

    Zomato—Now

    Following Goyal’s prediction, the recovery has now been over 80% in August 2020 and finally reached pre-COVID levels by October 2020. He further expects the food delivery business to grow 15-25 percent month on month. He informs that Zomato has done 9.2 crore deliveries since March with no reported transmission through delivery. The road through slow and rocky, persistence has still yielded results.

    Zomato—Steps Taken For Continued Business

    Precautions Taken By Zomato Delivery Partners During Pandemic

    Zomato recognized that they have to take initiatives for survival in the hostile business atmosphere. There were a series of steps taken that lay down an example of a strong spirit and determination. We look at a few of these:

    • Contactless Dining: Introduced in India and eight other countries, patrons were offered contactless dining when they visited a restaurant. People were able to enjoy the dining experience without any interaction with restaurant staff or touching menu cards.
    • Contactless Food Delivery: A similar concept to contactless dining, here food was delivered without direct interaction with the delivery person. The food is left at an agreed point and picked up by the customer.

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    • Temperature checks: All delivery partners have their temperatures checked when they reach the restaurant to pick up delivery before the order is handed out. This is then mentioned on the receipt for the benefit and information of the customers.
    • Aarogya Setu App: Zomato made it mandatory for all delivery partners to download and use the government-backed Aarogya Setu app.
    • Mask and Sanitizers: Mask and sanitizers have become a must at all times and for everyone. Zomato provided washable and reusable masks as well as sanitizers to all working delivery partners. Where they were unable to do this, they have reimbursed partners upon purchase o masks and sanitizers.
    • Training: All delivery staff was provided training on contactless delivery to ensure bot the parties remain safe during harsh times. This also included training on safety measures as recommended by WHO for delivery as well as personal fronts.
    • Restaurant safety: Zomato ensured that all partner restaurants implemented safety measures. They also shared all information with the user so they are assured of the safety measures and hygiene standards. This helps in making an informed decision. Restaurants also had to issue a declaration that they were following measures.
    • Insurance: Zomato has added OPD coverage of up to INR 5000 to cover potential testing costs for partners. In case of infection, they are also covered by insurance for medical expenses and any loss of earnings.
    • Disabling Cash on Delivery: Cash on delivery was disabled to avoid any contact and safety reasons.
    Precautions Taken By Zomato Restaurant Partners During Pandemic

    Zomato—Ventures

    Zomato’s primary business model has been the food delivery business. But it also had a small niche segment of delivering groceries, fruits, and vegetables. This venture was called Zomato markets.

    During the imposed lockdown in March and further, increasing numbers of COVID-19 swept India, people decided to go out of home less and less. The availability of daily essentials via Zomato was a lucrative option as bigger competitors like Big Basket and Amazon struggles to deliver. Zomato was able to deliver with ties to small and medium local shops.

    However, once lockdown became relaxed, it faced stiff competition from new and old competitors alike. Eventually, it did exit this business and decided to focus on the food delivery business model as it started reaching pre-COVID levels.

    Another interesting venture is Zomato’s Feed Daily Wager program under the aegis of Feed India campaign. It collected over 30 crores during the pandemic for this cause and was able to provide over 65 million meals to the daily wage earners who lost their means to earn.

    Also, under this program, they delivered rations kits which would contain up to 100 meals for the family. More than 100,000 of these kits have already been delivered over the pandemic period.

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    Zomato—FAQ’s

    What precautions did Zomato take while delivering the Food?

    Some of the precaution taken while delivering Food Products during this Pandemic were-

    • Contactless Delivery
    • Face masks
    • Disabling COD

    What is Contactless Delivery?

    Zomato launched a contactless delivery option that allowed the customer to opt option for the delivery partner to leave the package outside their home, ensuring no human-to-human interaction and hence lowering the risk of any transmission.

    How Zomato educated its delivery partners?

    Zomato was involved in continuously educating its delivery partners on hygiene practices (not to touch face, nose, sneeze in the elbow, etc.) to ensure their own as well as the ecosystem’s safety.

    Why did Zomato disabled the COD option?

    Zomato temporarily disabled the COD (cash-on-delivery) option on its app for safety reasons and to avoid contact between the customers and delivery partners.

    What is Zomato Gold Support Fund?

    Zomato launched the Zomato Gold Support Fund with the goal of helping out the restaurants that were finding it difficult to support their workers during the pandemic.

    How Zomato helped people who were directly affected by COVID-19?

    Zomato provided services to the quarantine facilities that were essential during this pandemic. It was very important for Zomato to find more than just a few ways to help the community fight against this pandemic. Zomato teamed up with Apollo Hospitals to deliver food to those who were in isolation wards, in their quarantine facilities.

    Zomato—Conclusion

    It was unimaginable to think of the world that we live in today. The most important lesson probably is being human and having humanity in these times. All of us need to rise above individuals and support each other as a community.

    Zomato has given us an example to follow. It saw its business decline on a slide, but it kept going and persevered. As a company, it tried to branch into other dimensions, albeit without success. But it remained focused and came back strongly in the end as the numbers and performance suggest.

    Another factor was the support to the community, it included customers, restaurants, delivery partners, and even people in general as everyone suffered. Zomato has shown grit, determination, heart, perseverance in adverse conditions to come out a winner.