Bengaluru-based food aggregator Swiggy is rustling up a new offer to win over restaurants hit hard by the lockdown and also plug the supply chain gap left by the disruptions caused by the coronavirus.
The company is offering to give poultry, meat, vegetables and other supplies along with packaging material to restaurants on credit through Swiggy Staples Plus, sources have told Moneycontrol.
Swiggy did not reply to Moneycontrol’s request for comments.
“It is still in its early beta testing stage, we will have to give it some time to mature and grow only then will we know how it will work out,” said a source on condition of anonymity.
Staples Plus, which is being tested, will extend the credit option to restaurants that get their supplies through Swiggy Staples, the company’s business-to-business delivery arm.
Repayments will be deducted from the money that Swiggy will collect from customers for the food it delivers for a restaurant, sources said.
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It will be interesting for restaurants to join Swiggy and Zomato’s supply network.
Restaurants will get further sucked into an ecosystem dominated by these players, something they have been raising their voice against.
The industry body National Restaurant Association of India is trying to build its own delivery networks but its relationship with the platforms goes beyond food delivery.
Even the food delivery business has been far from smooth, with restaurants accusing the two companies of predatory pricing and refusing to share consumer data.
“The B2B supply chains are too diverse and spread out to be dominated by any single or few players, restaurants are just keeping their options open. Only time will tell how this programme picks up in the future,” said a restaurant owner on condition of anonymity.
With restrictions easing, many were trying to go back to their delivery partners as well, the owner said.
It was the next obvious step for a company foraying into B2B supplies since the entire sector worked on credit, an industry insider told Moneycontrol.
Even Zomato runs Hyperpure, a raw-material delivery network for its restaurant partners. It is also understood to have a similar lending programme.
Taking credit
As per the initial design of the product, it will appear as ‘Pay on Credit’ on the payment screen for restaurant owners’ or the partner’s Swiggy app.
It will be like a buy-now-pay-later option, said the source. Dues will be shown as a credit on the books of banks and non-banking finance companies that have agreed to take exposure to this business.
“There is a general reluctance for lenders to increase exposure to hotels, restaurants and caterers, given there is uncertainty about their revival in the coming months,” said a top executive at a digital lending startup that underwrites small businesses.
“The lenders might have agreed to underwrite on the basis of the data that Swiggy had about its restaurant partners.”
The source said lending was based on April and May data for the restaurants. If they managed to do some business when the lockdown was most stringent, things would only get better from there.
Lenders were being extremely cautious while doing business with this sector, the source added.
The restaurant owner, who works with both the delivery partners, said most restaurants had traditional suppliers but many of them stopped working because of the lockdown.
“Usually, we would have payment cycles of six months with our suppliers but post-COVID all these cycles have broken down, most of the suppliers have gone offline,” the owner said.
Both Swiggy and Zomato, whose core business of food delivery has taken a hit due to the viral outbreak, are looking to plug that gap by becoming suppliers to their restaurant partners and double down on their B2B offerings.
They are even ready to give a five percent discount on prices for raw material to capture market share. Now with a lending option built-in, Swiggy can replicate the entire supply-chain experience for these businesses.
