After burning millions of dollars to expand its business globally, food ordering and delivery apps are charging more than the actual amount to fill their kitty. Online news portal Moneycontrol reported that the price inflation by these restaurant aggregators ranges from Rs 5 to 50, or even more. Surprisingly, the customers are not even aware of the fact that they are duped by these food and restaurant search and discovery services. The prices mentioned on the original menu of restaurant available on Zomato website is lesser than the prices shown when one actually orders through Zomato. As the customer places the final order, the prices increase automatically.
As per people privy to the development, the aggregators charge more in cases where restaurant owners do not pay high commission to food delivery companies. Depending on the agreement between restaurants and aggregators, the restaurant owners have to pay between 15 to 35 per cent of the cost of the item as commission. In order to maximise their profits, the food aggregators inflate pricing which eventually means that the differentials are being collected by them.
Calling the practice unethical, one of the industry experts said, "it is not ethical to not show the customers what the actual price is. They should keep their customers informed, else it is cheating in a fine line. There is a clarity that you cannot do discounting but there's no clarity on the upper price which adds on to the confusion."
Atul Pandey, a partner at Khaitan & Co, called for action from regulators against these food aggregators for abusing their dominant market position. "An equally major concern in such cases is the impact of the norms issued in respect of FDI in e-commerce entities, which will be applicable to such food aggregators in case they have any FDI in them, in light of the broad definition of 'e-commerce' which also includes services. Accordingly, in case any food aggregator is supporting a particular vendor in running its kitchen and selling food on the food aggregator's portal or directly or indirectly influence the sale price of goods or services, the same may come under DPIIT's scanner also," he added.
Both companies have denied any inflation in the pricing of products available on their platform. "As a marketplace, we do not enforce any pricing related decisions and instead encourage and guide our restaurant partners to follow consumer best practice," Swiggy said in a statement. Zomato clarified, "we do not encourage our restaurant partners to increase prices; such a practice is against our principles of neutrality built over the past decade."