Delivery apps contribute one-third of eateries' income: JM Financial report

Over 85 percent of restaurants have higher online menu prices compared with dine-in menu prices.

Although 75 percent of restaurants have direct ordering channels such as apps, websites, social media connections or direct tele-calling to generate demand, they get about a third of their revenue from food delivery aggregators Zomato and Swiggy.

A recent report by JM Financial surveyed more than 135 restaurants across the top 10 cities and found that over 85 percent of them have higher online menu prices compared with dine-in menu prices in order to recoup high aggregator commissions and discounts.

"While, theoretically, the organised food services industry can survive without the presence of aggregators, practically, that is unlikely to ever happen. Even some of the branded chain restaurants mentioned that they have limited bargaining power over aggregators on account of the latter's sheer size, customer loyalty and diversified supplier base," said the report.

According to the National Restaurant Association of India (NRAI), these large incumbent aggregators are not indispensable. The rise of aggregators has helped demand, but there has been friction over the high commission rates that restaurants claim to eat into their profits.

"For the restaurant business, their contribution should not be more than 15 percnt on average, while QSRs and cloud kitchens largely survive on these food aggregators. There is a strong duopoly in the delivery space currently, but survival, especially for small restaurants, is a challenge despite strong sales growth," Anurag Katriar, founder at Indigo Hospitality and NRAI Trustee, told the Economic Times. "The ecosystem is so unhealthy that no one, neither aggregators nor restaurants, is making a profit, clearly indicating that the current terms need to be reworked, which has been an ongoing process."