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Restaurants look for alternatives as Swiggy, Zomato serve them raw deal

Set up by serial entrepreneurs, startups like Peppo and DotPe are trying to address a huge gap that remains one of the big concerns among the restaurateurs and food aggregators -- direct engagement with the customers.

May 25, 2021 / 02:06 PM IST
The new platforms promise to share customer data with the restaurant owners, unlike Swiggy and Zomato.

The new platforms promise to share customer data with the restaurant owners, unlike Swiggy and Zomato.


With an aim to address the burning concerns such as rising commission costs and non-disclosure of customer data, multiple newly launched technology platforms are offering restaurateurs alternative means to do business in the duopolistic market created by aggregators Swiggy and Zomato.

Set up by serial entrepreneurs, startups like Peppo and DotPe are trying to address a huge gap that remains one of the big concerns among the restaurateurs and food aggregators -- direct engagement with the customers.

These platforms promise to share customer data with the restaurant owners, unlike Swiggy and Zomato.

Founded by Naman Pugalia, Peppo offers technology for online ordering to restaurant operators. Launched in April, the company offers restaurateurs a platform through which they can manage online ordering. It has been funded by  Infosys co-founder Nandan Nilekani.

Google-backed DotPe also is an offline-to-online platform which enables merchants to digitise their business. Founded in March 2020 by former PayU founder Shailaz Nag, Anurag Gupta and Gyanesh Sharma, the company helps merchants create online websites, make digital payments, provide analytics of customers and aggregate deliveries, among other things.

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Last year it tied up with the National Restaurant Association of India to create a digital ordering solution for restaurants.

The question is are they competing with the deep-pocketed aggregators?

Not really, said the founders of DotPe and Peppo while talking to Moneycontrol.

While DotPe calls itself as a pure B2B play, Peppo says it can best be termed as an alternative and not a competitor.

"We are not the competitors of Swiggy and Zomato. We help businesses build their products, marketing, fin-tech," Nag told Moneycontrol, adding that besides food, it also gets its business from grocery and apparel among other sectors.

However, for all the obvious reasons, they are being seen as the next best options restaurant operators have besides Swiggy and Zomato in the hyper growing food-delivery market.

According to research firm CLSA, the online food delivery market size is expected to grow to $11 billion in the next five years.

Due to COVID, Peppo is not charging any commission from restaurants as of now. However, the plan is to charge a small amount in the coming months.

"The technology is free and if you get an order, we will be charging a minimal fee. It will be a fraction of what the restaurants currently pay the aggregator," said Pugalia adding it will be in the range of Rs 10-15 or 10-15 percent of the order, whichever is lower.

The key promises being made to the restaurants are sharing of user data and never cannibalising their business by getting into the private label model.

Swiggy runs private brands such as The Bowl Company, Goodness Kitchen, etc.

"We will be sharing analytics on who's ordering what, which pin codes are seeing demand," said Pugalia.

The company will also give an upper hand to the restaurants to decide upon the terms of order cancellation and refunds to be offered to the customers.

Earlier this year, restaurateur Riyaaz Amlani took to social media to highlight some of the terms of Zomato which he alleged were unfair at a time when small eateries were facing the brunt of the pandemic.

The issue came to light after a restaurant shared a clause of Zomato saying it will suspend online ordering services if restaurants reject more than one order a day or if the size of the rejected order is more than 3 percent of the total value.

Amlani who owns Impresario Handmade Restaurants has also entered into a partnership with Mumbai’s dabbawalas to enable direct ordering for customers. The dabbawalas will pick up orders from Amlani's outlets such as Social, Salt Water Cafe and Smoke House Delhi. The aim is to enable direct and deeper relationships with the customers.

In the online food ordering business, it's always been the aggregators who have taken a call on how much money has to be refunded to the customers in case of a complaint. The restaurants seldom get a chance to have a say.

According to Pugalia, Peppo will give the power to the restaurants to decide the terms of cancellation or refund for an order.

Commission-charged-from-restaurants

It has hired Thejesh GN as head of engineering and Yeswanth Swami as the chief technology officer of the company.

So far it claims to have boarded over 100 restaurants across five cities.

The two companies facilitate last-mile logistics by tying up with companies like Shadowfax and Dunzo. The restaurants can also use their own staff to make the deliveries.

Many restaurant owners claim that contrary to popular perceptions they run their businesses on small margins. Cost of compliances and real estate eat away their margins. At this hour, the aggregators came as a huge help. They made the restaurants accessible to a larger set of people for a commission.

But over time what has happened is that the commission has gone up exponentially. Restaurants claim that the aggregators started charging 28-30 percent of the cost of the food order as commissions.

There are also additional charges over and above it. For instance, if restaurants want larger visibility, they will have to pay more. Discounting continues to be a big menace which often needs to be partially funded by restaurants.

"There was bound to be a pushback," said Chef Manu Chandra who is credited for successful F&B brands such as Monkey Café and Olive Bar & Restaurant adding that despite doing so much the owners were not getting to know who their customers were.

"When the very premise of my business is to take ownership of my customers, there is a relationship that you and I build together as a patron and as a service provider. That entire paradigm has been taken away from you. The aggregators harvest the data of consumption and then leverage it to their own advantage. There was bound to be a friction point," he said.

According to him, the aggregators forgot to think that their revenue came from the restaurants. "They cannot alienate us and keep us in the dark," he said.

Chandra is working with Peppo.

 

Priyanka Sahay
first published: May 25, 2021 09:12 am

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