8 ms·

India’s Restaurants Rebel Against Food Delivery Apps

99 points by ishikawa 7y ago

thewhitetulip 7y ago
The food delivery apps abuse the restaurants. I even read news reports that the apps had the restros pay the app's bills even though the app was wrong! This is typical in India, the rich and powerful screw over others upon which they have power on.
- sbmthakur 7y ago
  > I even read news reports that the apps... Any links?
  - pkteison 7y ago
    Grubhub charges restaurants for phone orders based on some claimed artificial intelligence determining that an order was placed on the phone call + the average price of the last 6 internet orders. A reporter easily found examples where reviewing calls where they decided to charge came up with false positives. "I reviewed some of the recordings for Ghost Truck Kitchen and found multiple false positives, where Grubhub charged the restaurant between $7.80 and $7.92 per call for informational phone calls that did not result in an order." https://www.vice.com/en_us/article/wjwebw/yelp-is-sneakily-replacing-restaurants-phone-numbers-so-grubhub-can-take-a-cut https://www.vice.com/en_us/article/wjwebw/yelp-is-sneakily-r...
    - sbmthakur 7y ago
      Thanks for chipping in. While I don't deny that could be happening in India as well, most of the reports of mistreatment of restaurants by aggregators(in India) have been anecdotal.
      - jessaustin 7y ago
        Wouldn't any report of anything be "anecdotal"? Journalists report stories; they typically don't conduct double-blind studies.
  - thewhitetulip 7y ago
    https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/restaurant-bodys-knives-still-out-for-zomato/articleshow/70919813.cms https://economictimes.indiatimes.com/small-biz/startups/news... Google "Zomato restaurant issue"
tracer4201 7y ago
On one hand, no one is forcing your restaurant to sign up to the app. On the other hand, my anecdotal experience is these food delivery apps typically have had garbage service (my orders are delayed hours, missing items I paid for, etc.) and not properly pay their employees (contractors) while taking losses to capture the market before regulation can catch up and solidify their hold (I.e. cost of entry for small players becomes excessive). I don’t support the business model, and I don’t give them my business.
SpicyLemonZest 7y ago
It's hard for me to get on board with the David vs. Goliath framing here. These people are running businesses - two of the three restauranteurs quoted even own a whole chain. If they want to cancel their food delivery service or demand better terms, more power to them, but it seems manipulative to try and make their pricing negotiations a social movement.
- danpalmer 7y ago
  > but it seems manipulative to try and make their pricing negotiations a social movement One restaurant leaving the platform will likely be much worse for that restaurant, but many leaving the scheme will be worse for the platform. No one restaurant has much bargaining power to demand better terms, but many together may be able to bargain better. It seems to me like this is exactly how they demand better terms and change the balance of power in the relationship. One could say that the platform putting such strain on the restaurants is manipulative because they know that it's very difficult for any restaurant to say no. I think it's just how the market works and think it's great that the restaurants are managing to push back somewhat.
  - SpicyLemonZest 7y ago
    Right, but without the framing that the restaurants are the little guy standing up to the system, what you're describing is just monopoly behavior. (Imagine all the grocery stores getting together and saying "hey, potato farmers, we decided your prices need to go down".)
    - crdoconnor 7y ago
      It won't be a monopoly unless every restaurant signs up to their movement. It seems somewhat distasteful to argue that the pricing power of the rich, powerful party should not be countered by the weaker, poorer party improving their pricing power - especially on a moral basis.
      - deleted 7y ago
        [deleted]
geodel 7y ago
Nothing unexpected here. Restaurant seems to think they should have major profit share as theirs is main cost and effort to prepare food. Apps guys think there wouldn't be much demand for restaurant food, weren't it for the apps ecosystem. In my personal experience in India just a couple of decades back restaurants would be frequented by either rich people (obviously) or middle class on a couple of special occasions per year. Nowadays eating outside food even few times per week has become increasingly common. So meal price will be overriding concern with majority of people. As much as those 'consumer surveys' claim that customers are looking for great quality and new experiences in food. Most folks would rather have average food at low price after an exhausting day. I think apps will have upper hand on this issue. As with all the knowledge of customer preferences for price/taste/cuisine etc they can very well create centralized kitchens producing most demanded items. At that point restaurants will again be in similar place as they were few decades back: filled by well-off patrons or by middle class on rare occasions.
- gerbilly 7y ago
  > Apps guys think there wouldn't be much demand for restaurant food, weren't it for the apps ecosystem. Yeah, like no one ever went to restaurants before the app ecosystem was created. When you physically go to a restaurant now, you have to be put in a queue with all the people ordering from apps. I've been in nearly empty restaurants where the wait was unbearably long. We just kept watching them ship bag after bag of food out the door.
  - llampx 7y ago
    You've proven your point here. The restaurant was empty but the demand was created by the people ordering from the comfort of their home. That shows that delivery is a big part of the restaurant's demand and clientele.
    - gerbilly 7y ago
      Seems to me that it just shows that for that restaurant, they chose to over-prioritize app orders over on site customers.
noego 7y ago
> “The consumer believes that a discount has been his right, not a privilege” It seems disingenuous to frame this "rebellion" as a moral issue. It isn't. It's a business issue. Business owners are free to evaluate their partnerships and pricing strategy on the basis of what is going to best benefit their revenue/profits. And consumers are free to evaluate potential restaurants/apps on the basis of many factors including price. Trying to argue that someone is acting immorally by wanting a discount, is nothing more than crying wolf. > "Another sore point is customer data. Neither Zomato nor Swiggy shares customers’ names and phone numbers with the restaurant that fills the order, citing privacy concerns. Restaurant owners said that left them with no way to market directly or build long-term relationships with their best customers." Thank God for that. The last thing I want when I order food online, is for every single restaurant I order from to start spamming my phone/email. This fact alone has lifted Zomato a few notches in my eyes.
- logfromblammo 7y ago
  If you want to build a direct relationship with customers, put an 8.5"x3.5" glossy flyer into the food order bag with your delivery phone number and your web site address on it, and hope I don't throw it out. If you call me up directly, I will be annoyed.
  - dmurray 7y ago
    Or your menu! Even in the age of delivery apps people still keep around takeaway menus.
    - misterman0 7y ago
      No, no, no, no. No! What about the trees?
      - dsego 7y ago
        If you are ordering food delivery (with plastic utensils, food containers, foil wrap etc) instead of cooking yourself (which is more economical), you don't care about trees.
cat199 7y ago
While I get that apps may be heavy handed, and perhaps the contracts should be renegotiated (not providing marketing data to restaurants for one seems 'off') a simple review of 'marginal cost'/'marginal utility' accounting would highlight that this is not necessarily the zero-sum game the article presents If I'm getting 50% more orders at the same fixed costs with a smaller profit margin on that subset of orders, I'm still netting higher total profits and getting higher utilization on my existing investment..
gingabriska 7y ago
Foreigner in Yoga city, I prefer to eat alone in my room or sometimes with my wife when she's around. I prefer it to a restaurant where I've no say in the temperature or noise in the room. Food is delivered hot and I love the overall experience, the delivery guys are mostly from South and very kind and talk nicely. I've only got positive things to say about delivery app experience.
synaesthesisx 7y ago
Why not just subsidize the discounts with VC money like everyone else?
- Ayesh 7y ago
  I thought that's what they were doing (I'm a consumer and not a restaurant owner). Hopefully at least Uber is burning VC money and not undercutting restaurant owners.
fit2rule 7y ago
Restaurants should just produce their own apps. Problem solved. Whats that? Its too hard? Well someone should make an app that makes it easy for restaurants and customers to have a relationship with each other, without involving a third party. What's that, its too hard? Well, the OS vendors should just make it easier for a person to contact another person and place safe orders with each other ..
- nix0n 7y ago
  > someone should make an app that makes it easy for restaurants and customers to have a relationship with each other They already exist and they're installed by default. Maps to find a nearby restaurant, browser to look at the menu, dialer to place the order.
  - fit2rule 7y ago
    Not really. These things are barely functional to most of the rest of the world. Maybe Maps finds things to eat in America, but its generally useless outside that market. There should be much more robust means of restaurant order taking that could be performed by an OS ..
    - thekid314 7y ago
      This is true, outside of the US and parts of Europe Google Maps is lacking, Apple Maps is barren, sometimes Maps.me has local people that keep it updated. There is a real gap waiting to be filled. Thi is my experience around the Middle East and Western Africa.
      - Ayesh 7y ago
        FourSquare could have been this, when they were good. They have many restaurants, photos, tips, photos of the paper menu, etc. Google Maps caught up and it, and from places I have been in Europe, Asia, and middle East, their photos, review, and information seem accurate and helpful enough.
    - 7y ago
stratelogical 7y ago
This is classic "Porter's 5 forces". "The number and power of a company's competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company's profitability." There are several hundreds of thousands of restaurants (maybe millions?). There are only 2-3 aggregators. Most of the restaurants are replaceable by a similar one. So aggregators have more bargaining power. As long as there is a profitable business model for the aggregators, the restaurants will get pushed to their lowest common profits. Without resorting to collusion with other restaurants (or asking the govt. to intervene) the only way to compete is to differentiate significantly that makes the customer desire a specific restaurant.
draw_down 7y ago
I get that restaurants are not entitled to whatever profit they think they should make, but that is true of the apps too. In the end, I wonder how the presence of these apps in the ecosystem makes things better, considered holistically. They have so little incentive to care about, for example, the quality of the food when it arrives, because if it's poor that will reflect on the restaurant, not the service. They will also do things like try to honor orders for restaurants that have explicitly rejected working with the services, because they just don't care what the restaurant wants. This is supposed to be the restaurant and the service working together to get the customer their food, but the incentives just seem misaligned the whole way. I'm guessing the end goal here for the services is to run the "restaurants" themselves.
daodedickinson 7y ago
You wouldn't download a meal!
yalogin 7y ago
I shudder to imagine how much styrofoam is used to deliver this food. Even if it’s all paaper based packaging it’s still a huge amount of waste generated. I can see these apps increasing food delivery multiple folds and so the waste generated as well.
Ayesh 7y ago
I was in India last month, and ordered food with Zomato and Uber Eats many times. Both Uber and Zomato have a lot of promotions and the food price is often 60% of what it would have costed if I were to fine-in (I walked into same restaurants a few times to see myself). The amount of plastic still being used today is unbelievable! Some restaurants send decomposable bags but the majority of the food is Inna plastic container, with plastic cutlery, and in a plastic bag. Zomato has an option to request not to send cutlery, but the environment is also taking a massive toll on this. The streets are full of motorbikes honking for 20 seconds straights every 5 seconds, and the delivery people looked exhausted too, whom I think should be well paid too, while costing the customer more. Another point here is that the restaurants registered tend to be more cleaner and follow hygienist ways to prepare food. This sounds like a small point in other countries, but I had a bad stomach for a few days and I would gladly take someone else's word over how far I can judge a restaurant how clean it is. For me, the best balance is placing an order through the app (with discounts, full menu, reviews, etc), walk in, and decide if I would like to return (this time without the app). This way, I get to check the restaurant without spending a lot of time, and the restaurant owner doesn't have to pay the apps for my subsequent orders. I can also try and help reduce plastic usage .

99 points by ishikawa 7y ago

The food delivery apps abuse the restaurants. I even read news reports that the apps had the restros pay the app's bills even though the app was wrong! This is typical in India, the rich and powerful screw over others upon which they have power on.

sbmthakur 7y ago
> I even read news reports that the apps... Any links?
- pkteison 7y ago
  Grubhub charges restaurants for phone orders based on some claimed artificial intelligence determining that an order was placed on the phone call + the average price of the last 6 internet orders. A reporter easily found examples where reviewing calls where they decided to charge came up with false positives. "I reviewed some of the recordings for Ghost Truck Kitchen and found multiple false positives, where Grubhub charged the restaurant between $7.80 and $7.92 per call for informational phone calls that did not result in an order." https://www.vice.com/en_us/article/wjwebw/yelp-is-sneakily-replacing-restaurants-phone-numbers-so-grubhub-can-take-a-cut https://www.vice.com/en_us/article/wjwebw/yelp-is-sneakily-r...
  - sbmthakur 7y ago
    Thanks for chipping in. While I don't deny that could be happening in India as well, most of the reports of mistreatment of restaurants by aggregators(in India) have been anecdotal.
    - jessaustin 7y ago
      Wouldn't any report of anything be "anecdotal"? Journalists report stories; they typically don't conduct double-blind studies.
- thewhitetulip 7y ago
  https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/restaurant-bodys-knives-still-out-for-zomato/articleshow/70919813.cms https://economictimes.indiatimes.com/small-biz/startups/news... Google "Zomato restaurant issue"

tracer4201 7y ago

On one hand, no one is forcing your restaurant to sign up to the app. On the other hand, my anecdotal experience is these food delivery apps typically have had garbage service (my orders are delayed hours, missing items I paid for, etc.) and not properly pay their employees (contractors) while taking losses to capture the market before regulation can catch up and solidify their hold (I.e. cost of entry for small players becomes excessive). I don’t support the business model, and I don’t give them my business.

SpicyLemonZest 7y ago

It's hard for me to get on board with the David vs. Goliath framing here. These people are running businesses - two of the three restauranteurs quoted even own a whole chain. If they want to cancel their food delivery service or demand better terms, more power to them, but it seems manipulative to try and make their pricing negotiations a social movement.

danpalmer 7y ago
> but it seems manipulative to try and make their pricing negotiations a social movement One restaurant leaving the platform will likely be much worse for that restaurant, but many leaving the scheme will be worse for the platform. No one restaurant has much bargaining power to demand better terms, but many together may be able to bargain better. It seems to me like this is exactly how they demand better terms and change the balance of power in the relationship. One could say that the platform putting such strain on the restaurants is manipulative because they know that it's very difficult for any restaurant to say no. I think it's just how the market works and think it's great that the restaurants are managing to push back somewhat.
- SpicyLemonZest 7y ago
  Right, but without the framing that the restaurants are the little guy standing up to the system, what you're describing is just monopoly behavior. (Imagine all the grocery stores getting together and saying "hey, potato farmers, we decided your prices need to go down".)
  - crdoconnor 7y ago
    It won't be a monopoly unless every restaurant signs up to their movement. It seems somewhat distasteful to argue that the pricing power of the rich, powerful party should not be countered by the weaker, poorer party improving their pricing power - especially on a moral basis.
    - deleted 7y ago
      [deleted]

geodel 7y ago

Nothing unexpected here. Restaurant seems to think they should have major profit share as theirs is main cost and effort to prepare food. Apps guys think there wouldn't be much demand for restaurant food, weren't it for the apps ecosystem. In my personal experience in India just a couple of decades back restaurants would be frequented by either rich people (obviously) or middle class on a couple of special occasions per year. Nowadays eating outside food even few times per week has become increasingly common. So meal price will be overriding concern with majority of people. As much as those 'consumer surveys' claim that customers are looking for great quality and new experiences in food. Most folks would rather have average food at low price after an exhausting day. I think apps will have upper hand on this issue. As with all the knowledge of customer preferences for price/taste/cuisine etc they can very well create centralized kitchens producing most demanded items. At that point restaurants will again be in similar place as they were few decades back: filled by well-off patrons or by middle class on rare occasions.

gerbilly 7y ago
> Apps guys think there wouldn't be much demand for restaurant food, weren't it for the apps ecosystem. Yeah, like no one ever went to restaurants before the app ecosystem was created. When you physically go to a restaurant now, you have to be put in a queue with all the people ordering from apps. I've been in nearly empty restaurants where the wait was unbearably long. We just kept watching them ship bag after bag of food out the door.
- llampx 7y ago
  You've proven your point here. The restaurant was empty but the demand was created by the people ordering from the comfort of their home. That shows that delivery is a big part of the restaurant's demand and clientele.
  - gerbilly 7y ago
    Seems to me that it just shows that for that restaurant, they chose to over-prioritize app orders over on site customers.

noego 7y ago

> “The consumer believes that a discount has been his right, not a privilege” It seems disingenuous to frame this "rebellion" as a moral issue. It isn't. It's a business issue. Business owners are free to evaluate their partnerships and pricing strategy on the basis of what is going to best benefit their revenue/profits. And consumers are free to evaluate potential restaurants/apps on the basis of many factors including price. Trying to argue that someone is acting immorally by wanting a discount, is nothing more than crying wolf. > "Another sore point is customer data. Neither Zomato nor Swiggy shares customers’ names and phone numbers with the restaurant that fills the order, citing privacy concerns. Restaurant owners said that left them with no way to market directly or build long-term relationships with their best customers." Thank God for that. The last thing I want when I order food online, is for every single restaurant I order from to start spamming my phone/email. This fact alone has lifted Zomato a few notches in my eyes.

logfromblammo 7y ago
If you want to build a direct relationship with customers, put an 8.5"x3.5" glossy flyer into the food order bag with your delivery phone number and your web site address on it, and hope I don't throw it out. If you call me up directly, I will be annoyed.
- dmurray 7y ago
  Or your menu! Even in the age of delivery apps people still keep around takeaway menus.
  - misterman0 7y ago
    No, no, no, no. No! What about the trees?
    - dsego 7y ago
      If you are ordering food delivery (with plastic utensils, food containers, foil wrap etc) instead of cooking yourself (which is more economical), you don't care about trees.

cat199 7y ago

While I get that apps may be heavy handed, and perhaps the contracts should be renegotiated (not providing marketing data to restaurants for one seems 'off') a simple review of 'marginal cost'/'marginal utility' accounting would highlight that this is not necessarily the zero-sum game the article presents If I'm getting 50% more orders at the same fixed costs with a smaller profit margin on that subset of orders, I'm still netting higher total profits and getting higher utilization on my existing investment..

gingabriska 7y ago

Foreigner in Yoga city, I prefer to eat alone in my room or sometimes with my wife when she's around. I prefer it to a restaurant where I've no say in the temperature or noise in the room. Food is delivered hot and I love the overall experience, the delivery guys are mostly from South and very kind and talk nicely. I've only got positive things to say about delivery app experience.

synaesthesisx 7y ago

Why not just subsidize the discounts with VC money like everyone else?

Ayesh 7y ago
I thought that's what they were doing (I'm a consumer and not a restaurant owner). Hopefully at least Uber is burning VC money and not undercutting restaurant owners.

fit2rule 7y ago

Restaurants should just produce their own apps. Problem solved. Whats that? Its too hard? Well someone should make an app that makes it easy for restaurants and customers to have a relationship with each other, without involving a third party. What's that, its too hard? Well, the OS vendors should just make it easier for a person to contact another person and place safe orders with each other ..

nix0n 7y ago
> someone should make an app that makes it easy for restaurants and customers to have a relationship with each other They already exist and they're installed by default. Maps to find a nearby restaurant, browser to look at the menu, dialer to place the order.
- fit2rule 7y ago
  Not really. These things are barely functional to most of the rest of the world. Maybe Maps finds things to eat in America, but its generally useless outside that market. There should be much more robust means of restaurant order taking that could be performed by an OS ..
  - thekid314 7y ago
    This is true, outside of the US and parts of Europe Google Maps is lacking, Apple Maps is barren, sometimes Maps.me has local people that keep it updated. There is a real gap waiting to be filled. Thi is my experience around the Middle East and Western Africa.
    - Ayesh 7y ago
      FourSquare could have been this, when they were good. They have many restaurants, photos, tips, photos of the paper menu, etc. Google Maps caught up and it, and from places I have been in Europe, Asia, and middle East, their photos, review, and information seem accurate and helpful enough.
  - 7y ago

stratelogical 7y ago

This is classic "Porter's 5 forces". "The number and power of a company's competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company's profitability." There are several hundreds of thousands of restaurants (maybe millions?). There are only 2-3 aggregators. Most of the restaurants are replaceable by a similar one. So aggregators have more bargaining power. As long as there is a profitable business model for the aggregators, the restaurants will get pushed to their lowest common profits. Without resorting to collusion with other restaurants (or asking the govt. to intervene) the only way to compete is to differentiate significantly that makes the customer desire a specific restaurant.

draw_down 7y ago

I get that restaurants are not entitled to whatever profit they think they should make, but that is true of the apps too. In the end, I wonder how the presence of these apps in the ecosystem makes things better, considered holistically. They have so little incentive to care about, for example, the quality of the food when it arrives, because if it's poor that will reflect on the restaurant, not the service. They will also do things like try to honor orders for restaurants that have explicitly rejected working with the services, because they just don't care what the restaurant wants. This is supposed to be the restaurant and the service working together to get the customer their food, but the incentives just seem misaligned the whole way. I'm guessing the end goal here for the services is to run the "restaurants" themselves.

daodedickinson 7y ago

You wouldn't download a meal!

yalogin 7y ago

I shudder to imagine how much styrofoam is used to deliver this food. Even if it’s all paaper based packaging it’s still a huge amount of waste generated. I can see these apps increasing food delivery multiple folds and so the waste generated as well.

Ayesh 7y ago

I was in India last month, and ordered food with Zomato and Uber Eats many times. Both Uber and Zomato have a lot of promotions and the food price is often 60% of what it would have costed if I were to fine-in (I walked into same restaurants a few times to see myself). The amount of plastic still being used today is unbelievable! Some restaurants send decomposable bags but the majority of the food is Inna plastic container, with plastic cutlery, and in a plastic bag. Zomato has an option to request not to send cutlery, but the environment is also taking a massive toll on this. The streets are full of motorbikes honking for 20 seconds straights every 5 seconds, and the delivery people looked exhausted too, whom I think should be well paid too, while costing the customer more. Another point here is that the restaurants registered tend to be more cleaner and follow hygienist ways to prepare food. This sounds like a small point in other countries, but I had a bad stomach for a few days and I would gladly take someone else's word over how far I can judge a restaurant how clean it is. For me, the best balance is placing an order through the app (with discounts, full menu, reviews, etc), walk in, and decide if I would like to return (this time without the app). This way, I get to check the restaurant without spending a lot of time, and the restaurant owner doesn't have to pay the apps for my subsequent orders. I can also try and help reduce plastic usage .