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The Karnataka Hotel Association has stepped up its campaign against food delivery platforms, claiming restaurants are left with just 45-50% of the order value after commissions, discounts and other deductions, as it presses ahead with plans to boycott Swiggy and Zomato from August 15 unless its concerns are addressed.
The association has warned that thousands of restaurants in Bengaluru could stop accepting orders through food delivery platforms Swiggy and Zomato from August 15 if the companies fail to address concerns over what restaurant owners describe as excessive deductions and opaque settlement practices.
As many as 21,000 Swiggy-listed hotels will join the proposed boycott, Rao said.
"We have had two to three meetings with Swiggy's leadership regarding abnormal deductions. Apart from the agreed commission and GST, nothing more should be deducted. But without our permission, discounts, advertisements, long-distance delivery charges and several other costs are being deducted from our payouts," PC Rao, President of the Karnataka Hotel Association, told CNBC-TV18.
Karnataka hotels are exploring Rapido's Ownly and direct ordering as alternatives to Swiggy. They are also in talks with Flipkart ahead of its food delivery launch.
According to the association, restaurant owners are demanding an end to automatic deductions following customer complaints, compensation for orders cancelled after food has been prepared, detailed settlement reports explaining every deduction, removal of one-sided contract clauses and the appointment of a dedicated relationship manager for each restaurant.
Rao claimed that after factoring in various charges, restaurants are often left with only 45-50% of the order value.
Around 30% of food orders are currently placed online, he said.
"If I make business worth ₹1,000 in a day, I receive only around ₹450-500 as payout. Nearly 50-55% gets deducted. We are asking for a transparent payout system and removal of hidden charges," he said.
The association has given Swiggy until August 15 to resolve the issues.
"If they do not rectify and regularise the system, we will stop Swiggy services from August 15. Hospitality associations across Bengaluru have already decided to join us," Rao said.
The association estimates that around 21,000 restaurants are registered on Swiggy in Bengaluru and expects a majority of them to support the proposed boycott.
Rao said restaurants are not opposed to working with delivery platforms but want a fairer commercial arrangement.
"They are our business partners, not the owners of our hotels. If they come forward with reasonable solutions, we are happy to continue the partnership," he added.
Restaurant owners also allege that discounts are often applied without their explicit consent.
The owner of Nisarga Grand restaurant claimed that commissions have steadily increased over the years while additional promotional discounts and advertising charges have further reduced earnings.
"Earlier, commissions were around 5-8%, then they increased to 15% and 20%. Now discounts and advertisements are being added without proper consultation. After all the deductions, it becomes difficult to run the business profitably," the owner told CNBC-TV18.
The association said it is also exploring alternative delivery models, including tie-ups with commission-free logistics providers and encouraging customers to order directly from restaurants.
Rao said the August 15 deadline had been set to give Swiggy sufficient time to review its systems and respond to the association's demands.
The association has warned that thousands of restaurants in Bengaluru could stop accepting orders through food delivery platforms Swiggy and Zomato from August 15 if the companies fail to address concerns over what restaurant owners describe as excessive deductions and opaque settlement practices.
As many as 21,000 Swiggy-listed hotels will join the proposed boycott, Rao said.
"We have had two to three meetings with Swiggy's leadership regarding abnormal deductions. Apart from the agreed commission and GST, nothing more should be deducted. But without our permission, discounts, advertisements, long-distance delivery charges and several other costs are being deducted from our payouts," PC Rao, President of the Karnataka Hotel Association, told CNBC-TV18.
Karnataka hotels are exploring Rapido's Ownly and direct ordering as alternatives to Swiggy. They are also in talks with Flipkart ahead of its food delivery launch.
According to the association, restaurant owners are demanding an end to automatic deductions following customer complaints, compensation for orders cancelled after food has been prepared, detailed settlement reports explaining every deduction, removal of one-sided contract clauses and the appointment of a dedicated relationship manager for each restaurant.
Rao claimed that after factoring in various charges, restaurants are often left with only 45-50% of the order value.
Around 30% of food orders are currently placed online, he said.
"If I make business worth ₹1,000 in a day, I receive only around ₹450-500 as payout. Nearly 50-55% gets deducted. We are asking for a transparent payout system and removal of hidden charges," he said.
The association has given Swiggy until August 15 to resolve the issues.
"If they do not rectify and regularise the system, we will stop Swiggy services from August 15. Hospitality associations across Bengaluru have already decided to join us," Rao said.
The association estimates that around 21,000 restaurants are registered on Swiggy in Bengaluru and expects a majority of them to support the proposed boycott.
Rao said restaurants are not opposed to working with delivery platforms but want a fairer commercial arrangement.
"They are our business partners, not the owners of our hotels. If they come forward with reasonable solutions, we are happy to continue the partnership," he added.
Restaurant owners also allege that discounts are often applied without their explicit consent.
The owner of Nisarga Grand restaurant claimed that commissions have steadily increased over the years while additional promotional discounts and advertising charges have further reduced earnings.
"Earlier, commissions were around 5-8%, then they increased to 15% and 20%. Now discounts and advertisements are being added without proper consultation. After all the deductions, it becomes difficult to run the business profitably," the owner told CNBC-TV18.
The association said it is also exploring alternative delivery models, including tie-ups with commission-free logistics providers and encouraging customers to order directly from restaurants.
Rao said the August 15 deadline had been set to give Swiggy sufficient time to review its systems and respond to the association's demands.
