New restrictions may plunge food delivery platforms back into peril, Retail News, ET Retail


New restrictions may plunge food delivery platforms back into perilMumbai: Food delivery platforms Zomato and Swiggy—and the restaurants they work with—are already feeling the brunt of the latest round of restrictions imposed by governments in two of their biggest markets.

With night curfews in place in both Delhi (10 pm to 5 am) and all of Maharashtra, including Mumbai (8 pm to 7 am), several large chains have announced closure of their restaurants.

Operations of Zomato and Swiggy had rebounded to pre-pandemic levels a couple of months ago. But the impact of the latest round of restrictions became evident on Monday itself, when both platforms stopped taking orders at 7:30 pm and missed out on peak time for dinner orders.

“Food delivery volumes were very lukewarm on Monday evening. Not many eat dinner before 8 pm in India,” said Anurag Katriar, president of the National Restaurant Association of India and the CEO of deGustibus Hospitality, which runs Indigo Deli and other brands.

He added that he wasn’t sure if his outlets would stay open from Wednesday. His cloud kitchens on the other hand would continue to operate, he said.

Swiggy and Zomato, which have a combined 55,000 delivery partners in Maharashtra alone, have said they will bear the cost of testing and vaccinating them, but are pushing back on the government’s timeline for this. A Swiggy spokesperson said, “We’re working with the state government as an industry to request an extension on the timeline for completion of RT-PCR tests considering our large delivery partner base in the state. As an essential service, we’re also requesting them to consider extending the deadline for food delivery, including a grace period to allow our delivery partners to safely reach their homes after completing the last delivery.”

Delivery outsourcing platform Grub, which gets 15-20% of its business from providing riders to quick-service restaurants such as McDonald’s, Pizza Hut, and KFC, also said getting all their partners tested quickly was proving a challenge. “The issue we are facing is setting up a quick process to get them a digital vaccination ID, and to get them RT-PCR tests and digitally track these,” said Grab cofounder Pratish Sanghvi.

Zomato did not respond to ET’s query on how the restrictions could impact their business.

With only 10-15% of revenue for dine-in restaurants coming from online delivery, some are not willing to fight for the sliver of revenue. Riyaaz Amlani, chief executive of Impresario Entertainment and Hospitality, which runs restaurant brands including Social, Saltwater Cafe, and Smokehouse Deli, said most of his 27 outlets in Maharashtra would stay shut.

“It doesn’t make sense to operate for delivery, given the deadline in Maharashtra. The overheads are phenomenal. We will not be able to operate for delivery unless we have full time for operations; at least till 1 am,” said Amlani, whose restaurants use Swiggy, Zomato, and their own fleets to make deliveries.

Meanwhile, members of various restaurant associations are also pushing to extend the delivery timings, but so far no progress has been made. Karan Tanna, founder and CEO of Ghost Kitchens that primarily uses Swiggy and Zomato to fulfil orders, said the new restrictions have wiped out the majority of his business.

He said a group of restaurant associations has requested the state government to extend delivery timings and make restaurants an essential service again. “The discussions are ongoing,” he added, without revealing the names of the associations.

“More than 50% of business is from dinner and late-night deliveries, so this has definitely had a big impact,” said Tanna, who has 100 points of sales via his five kitchens in Mumbai. “And because we were just recovering from the older impacts, this will only make it worse.”

Raghav Joshi, co-founder of Rebel Foods which operates close to 90 kitchens in Maharashtra, said he saw order volumes spike before the 8 pm deadline. “People have started ordering dinner early, realising that services are going to stop. We saw that shift happening in other cities with Covid-19 restrictions last year, too,” Joshi said.



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