The Federation of Hotel & Restaurant Associations of India (FHRAI), the third largest hospitality association globally, has voiced deep concerns regarding Zomato and Swiggy’s latest foray into the private label food delivery sector. The association cites issues of unfair competition, misuse of restaurant data, and potential food safety risks. Now, these companies use their market power to compete directly with businesses they were meant to assist.

FHRAI plans to confer with the Ministry of Commerce to express these concerns and advocate for regulatory measures that ensure fair practices in the food service industry.

The intention behind this advocacy is to tackle rising issues of data misuse by food delivery services, which now possess a competitive edge over traditional restaurants. By analyzing customer data such as preferences and trends, they can tailor offers that directly affect restaurant businesses, jeopardizing their survival.

Pradeep Shetty, Vice President of FHRAI, remarked:

“We are meeting with the Commerce Ministry very soon and have requested an expedited appointment to discuss this serious issue. The actions of platforms like Zomato and Swiggy represent a direct violation of established e-commerce regulations.”

He points out that these companies originally served as neutral platforms connecting customers with restaurants instead of becoming competitors. The introduction of their food products undermines the fundamental marketplace model, creating inequitable conditions detrimental to restaurants.

Shetty emphasizes the ethical concerns surrounding the exploitation of sensitive restaurant data:

“What is alarming is the use of years’ worth of proprietary data collected from restaurants on customer preferences, which allows them to develop and promote their own products while excluding the restaurants from accessing this data.”

Moreover, crucial questions arise concerning the food safety standards for these private label items, with no clarity on whether they are subject to the same stringent regulations as restaurants. The current situation not only diminishes consumer trust but jeopardizes the entire restaurant industry’s reputation.

FHRAI advocates for clear guidelines to protect restaurant data and for private label products to meet identical safety and quality standards as restaurant food, seeking a fair and competitive food service industry for all parties involved.