According to a letter seen by Reuters, the Domino’s Pizza India franchise would consider diverting some of its business away from popular food delivery apps Zomato and SoftBank-backed Swiggy if their commissions continue to climb.
Jubilant Food Works NSE -0.51 percent, which operates the Domino’s and Dunkin’ Donuts chains in India, made the statement in a private file with the Competition Commission of India (CCI), which is examining Zomato and Swiggy’s alleged anti-competitive conduct.
Jubilant is India’s largest food services firm, with over 1,600 branded restaurant locations, including 1,567 Domino’s and 28 Dunkin’ Donuts locations. The CCI launched an investigation against Zomato, and Swiggy in April after an Indian restaurant company accused them of preferential treatment, high commissions, and other anticompetitive conduct. Apps for food delivery
According to a letter seen by Reuters, the Domino’s Pizza India franchise would consider diverting some of its business away from popular food delivery apps Zomato and SoftBank-backed Swiggy if their commissions continue to climb.
Following the CCI’s request for responses from the Domino’s India franchise and several other restaurants as part of its investigation, Jubilant NSE -0.51 percent requested more time to share data related to its online sales but wrote to the watchdog expressing concerns about potentially higher food-ordering platform commissions.
“If commission prices rise, Jubilant would consider relocating more of its business from online restaurant platforms to the in-house ordering system,” the firm noted in a letter to the CCI dated July 19.
The CCI and Jubilant FoodWorks both declined to respond.
Zomato, which is financed by China’s Ant Group, stated that it has no intentions to raise top-tier restaurant partner commissions. “No commercial choices are made unilaterally that may hurt our stakeholders.”
Food delivery services have grown in popularity in India, thanks to the increased usage of smartphones and the tempting discounts on offer. In February, Jubilant said that the Domino’s app was installed 8.2 million times for the quarter ending December 2021 and that its “own app sales continued to increase faster than the aggregators.”
Jubilant’s warning comes as Zomato and Swiggy face allegations from various Indian businesses that their alleged tactics are harming their company.
The CCI case was prompted by a complaint by the National Restaurant Association of India, which claims that commissions imposed by Zomato and Swiggy in the 20 percent to 30 percent range were “unviable.”
According to a top industry executive with firsthand knowledge, Zomato’s and Swiggy’s commissions were a source of worry for Domino’s and many other eateries.
“Any more increases in commissions will result in financial squeezes for firms and will simply be passed on to customers,” said the executive, who declined to be identified.
Before the probe was publicized, Zomato informed the CCI that it negotiates and charges restaurant fees, but that they have no impact on how listings appear on its app.
Swiggy asserted that its commissions were calculated.
India’s food delivery market has got a major boost with the increasing smartphone and internet adoption. Following the Covid-19 pandemic and with players including Zomato, Swiggy, and Domino’s Pizza introducing contactless delivery services, these platforms captured the Indian market further.
As per a report, the Indian online food delivery market is expected to grow at a compound annual growth rate (CAGR) of 28.9% between 2022 and 2027.
The food delivery market share growth in India by the online segment will be significant for revenue generation. With a large number of young people living across various cities, food delivery apps in India have become instantly popular among these users. The change in shopping preferences propels the sales of food deliveries through the online channel, contributing to the market growth.
