Hotel owners in Andhra Pradesh to boycott Swiggy over ‘unethical practices’ from October 14

Apart from high commission rates, the delivery app holds restaurants’ payouts for up to 12 days, say APHA members, adding that discounts are being deducted from the earnings of restaurants without their knowledge

The members of Andhra Pradesh Hotels Association (APHA) have decided to boycott Swiggy’s food delivery app from October 14, 2024.

At a media conference on October 4 (Friday), APHA State president R.V. Swamy said a decision to this effect was necessitated as the restaurants were losing 40% to 60% of their menu prices due to “certain unethical practices of Swiggy”.

He said that Swiggy and Zomato began operations in Andhra Pradesh eight years ago and initially operated with zero commission fees for restaurants. However, their commission rates has escalated up to 30%.

APHA secretary M. Nagaraju, executive secretary I. Raghuveer Shenoy and treasurer E.V. Purnachand were also present.

They said the delivery apps were holding the restaurants’ payouts for up to 12 days, putting enormous financial strain on smaller establishments and threatening their survival. “The APHA has held three rounds of talks with the food delivery apps Swiggy and Zomato. While Zomato assured that it would work towards more restaurant-friendly policies and responded favourably to most of the requests by the restaurants, Swiggy refused to address the pressing issues raised by the restaurant owners,” they said.

Taking exception to what they called “uninformed discounts”, the APHA members complained that discounts were being applied and deducted from the earnings of restaurants without their knowledge. Only selective restaurants were targeted for these discounts, with the cost shared either between the restaurant and the food delivery app or entirely absorbed by the delivery company, they said.

‘Harsh refund policies’

They accused Swiggy of making changes to restaurants’ menus without the consent of restaurants, often selling items at lower prices. The food delivery apps often enforce harsh refund policies, in which neither the customer nor the restaurant receives a refund, leaving the latter at a loss.

Citing the promotional fees being charged by the delivery platforms from them “on the pretext of more visibility and generating more orders”, they said it was “unethical and unfair practices”, resulting in a significant financial burden on restaurant owners.

Commission on GST

Referring to the discounts of up to ₹120 per order announced by the delivery apps, they said they were often shouldered by the restaurant owners. “Swiggy not only charges high commission rates but takes commissions on the Goods and Services Tax (GST) payable by the merchant to the government, which is illegal and unethical,” said Mr. Swamy.

Published - October 04, 2024 09:32 pm IST