The Federation of Hotel & Restaurant Associations of India (FHRAI), the world’s third-largest hospitality association, has voiced serious concerns about Zomato and Swiggy’s entry into the private label food delivery business. FHRAI has highlighted issues such as unfair competition, misuse of restaurant data, and potential food safety risks, emphasizing the platforms’ deviation from their original role as neutral intermediaries between restaurants and consumers.
According to FHRAI, Zomato and Swiggy are leveraging proprietary data gathered from restaurants, including customer preferences and sales trends, to develop and promote their own branded food products. This practice not only undermines small and medium-sized restaurants but also raises ethical and legal concerns about data privacy. Pradeep Shetty, Vice President of FHRAI, criticized the platforms for creating an uneven playing field, stating, “By selling their own food products, they violate the principles of a marketplace model and disproportionately harm restaurants that lack access to the same data.”
Additionally, FHRAI raised alarms over the transparency and safety standards of these private label products. While restaurants must adhere to stringent food safety regulations, there is no clarity on whether similar standards are enforced for products sold by Zomato and Swiggy. The lack of clear regulations around private label offerings poses risks to consumer trust and the reputation of the restaurant industry.
Zomato and Swiggy’s move into the quick commerce space, where they control both the creation and distribution of food, has prompted FHRAI to call for regulatory intervention. The association plans to meet with the Ministry of Commerce to advocate for enforceable guidelines to protect restaurant data, ensure food safety, and establish fair competition. FHRAI emphasizes the need for transparency and accountability to safeguard the interests of restaurants and consumers alike, urging swift regulatory action to address these pressing concerns.
