Mumbai: The Federation of Hotel & Restaurant Associations of India (FHRAI), the third largest hospitality association in the world, has raised serious concerns regarding Zomato and Swiggy’s recent foray into private label food delivery. The association has highlighted issues such as unfair competition, misuse of restaurant data, and potential risks to food safety.
Zomato and Swiggy, platforms originally created to connect restaurants with customers, are now using their market dominance to directly compete with the businesses they once supported. FHRAI plans to meet with the Ministry of Commerce to discuss these concerns and advocate for regulatory action to ensure fair practices in the food service industry.
A key issue raised by FHRAI is the misuse of restaurant data. Zomato and Swiggy are leveraging proprietary data from restaurants, such as customer preferences and sales trends, to create personalized deals and promote their own private label products. This practice threatens the livelihoods of small and medium-sized restaurants and raises significant concerns about data privacy and consent.
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. What is particularly alarming is the use of years’ worth of proprietary data collected from restaurants on 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 further added, “Additionally, there are serious questions surrounding the food safety standards applied to these private label 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.”
The association has also raised concerns about food safety, pointing out that while restaurants are held to strict food safety standards, there is no transparency regarding whether Zomato and Swiggy’s private label products adhere to the same regulations. This lack of fairness not only risks consumer trust but also threatens the reputation of the entire restaurant industry.
Zomato and Swiggy’s expansion into private label food products has prompted fears of monopolistic practices. With these platforms now controlling both the distribution and creation of food, FHRAI stresses the need for a regulatory framework that ensures a level playing field for all industry stakeholders, including restaurants, food delivery platforms, and consumers.
The association is calling for clear, enforceable guidelines that protect restaurant data and ensure that private label products sold by platforms like Zomato and Swiggy meet the same food safety and quality standards as those required for restaurant food. FHRAI urges regulators to take swift action to address the growing concerns related to data misuse, unfair competition, and food safety.
By advocating for fair, transparent, and competitive practices, FHRAI aims to create an environment where both restaurants and consumers are protected, ensuring a sustainable and equitable food service industry.
