Food just got costlier as FoodPanda, Swiggy and TinyOwl cut discounts and raise fee
Bengaluru, India | Red Newswire | Jan 7, 2016 Last Updated at 7:03 PM IST.
Last year we saw heavy discounts and many discounts on restaurant menus, as food-tech startups were battling between themselves to take the crown. Seems like it costed them much and now all have raised their fee.
This is one fine move as the startups have got a lot many restaurants tied-up to them because of huge consumer base. Swiggy and TinyOwl are back on fundraising track and to convince investors that they are worth it.
The startups have steeply cut off discounts and are leaning towards implementing corrective measures.
On the other hand, we see investors losing patience with food-tech startups. One of the investor said, “The big test will be if restaurants are willing to pay for food deliveries, and if yes, how much, and will this cover business costs.”
Upto 30% commissions have been raised by food-tech startups on one order, where they started from 5%. Saurabh Kochhar, CEO of FoodPanda India says, “The commission depends on multiple factors like services we offer, the level of marketing support and average basket size.”
Swiggy charges 25% to the restaurants. Nandan Reddy, Co-founder of Swiggy says, “Depending on the business generated, we negotiate our service fees with listed restaurants every three to six months.” Swiggy caters to 20,000 orders per day.
A Bengaluru-based food chain listed with both TinyOwl and Swiggy said that the increased charges are not affecting them much since they get only 10% of the orders online. Harsh Vardhan of TinyOwl said, “Also, currently the volume is very low, and this route is still more efficient than keeping our own delivery boys."
The big rival of these startups, Zomato allows the restaurants to decide if they want to absorb the delivery cost or charge it to the customer. Zomato launched its delivery system last year and targets premium restaurant with a charge of 25%.
Similar strategies are being adopted by the other startups in the sector.