At the Mercy of the Apps: How Swiggy & Zomato Controls India's Food Business...

If you run a restaurant, QSR, or cloud kitchen in India today, here’s an uncomfortable truth—you’re not just partnering with Swiggy and Zomato. You’re paying rent to exist in the digital food economy. And that rent keeps climbing.

The two platforms control nearly 100% of India’s organized food delivery market, with Zomato holding 55-58% and Swiggy capturing 42-45%. Together, they process 814 million orders annually and generated a combined platform fee revenue of ₹1,900 crore in 2024-25 alone—a number that has grown 600% in just two years. For restaurants, this duopoly has fundamentally altered the business model, squeezing margins, dictating visibility, and creating a dependency so deep that 35% of restaurant owners say they would exit these platforms if given a real alternative.

The Real Cost of Being “Partnered”

When a customer orders a ₹1,000 biryani on Zomato or Swiggy, here’s what actually happens behind the scenes.

The platform charges a base commission of 18-28%—let’s say 25%, or ₹250. Then comes 18% GST on that commission, adding another ₹45. Payment gateway charges tack on 2-3% (₹25), with their own 18% GST (₹4.5). Factor in the delivery fee cut taken by the platform—another 5-8%, or roughly ₹60—and you’re already down to ₹615 before you’ve counted the cost of ingredients, labor, or packaging.

But wait. The platform also nudges you to run a “50% OFF” promotion to stay competitive. If the customer paid ₹500 after the discount, the restaurant often absorbs 30-50% of that discount cost—another ₹150-250 hit. And if you want your restaurant to actually appear when someone searches for biryani? That requires advertising spend of ₹9,000 to ₹20,000 per week. Without it, your listing vanishes into algorithmic obscurity, even if you have a 4.5-star rating.

One restaurant owner interviewed by MediaNama described it bluntly: “A single click costs ₹6. Even if a customer just views your restaurant and doesn’t buy, that’s ₹6 gone.” Another operator calculated that after commission (21.24%), discounts (12%), and advertising (15%), nearly 48% of revenue disappears before the kitchen even breaks even.

A Tale of Two Margins: Dine-In vs. Delivery

Traditional restaurant economics rest on gross margins of 65-70%. A well-run dine-in operation can expect net profits of 5-15%, depending on rent, labor, and operational efficiency. Delivery flips that equation. With platforms taking their cut, delivery margins collapse to 40-50%—often lower. Many restaurants now operate delivery as a loss leader, accepting razor-thin or negative margins just to maintain volume and brand presence.

Cloud kitchens—delivery-only operations without dine-in infrastructure—were supposed to solve this. By eliminating front-of-house costs and prime real estate, cloud kitchens achieve profit margins of 15-25%, versus the 5-15% typical of traditional restaurants. But even cloud kitchens face brutal economics when 20-30% of every order goes to the platform. The supposed low-cost advantage is eaten away by commission, advertising, and discounting pressure.

One Mumbai café documented the impact after negotiating its commission from 25% to 18% and removing low-margin items: it saved ₹10,000 per month and reduced refunds by 35%. But it took active management, leverage, and data tracking—resources that small, independent restaurants often lack.

How Visibility Became a Commodity You Have to Buy

Swiggy and Zomato don’t just connect restaurants to customers. They control the discovery layer—the interface where hunger meets choice. And that control is monetized aggressively.

Sponsored listings are now the norm. When you open either app and search for a cuisine or dish, the top 10 results are almost always paid placements. Restaurants that don’t advertise don’t appear—even to customers searching by name in some cases. Zomato’s ad system uses a “cost-per-click” model where restaurants are charged every time a user taps their listing, whether or not an order is placed. Swiggy’s approach is murkier: some operators report that ads are implemented automatically, with weekly budgets escalating from ₹9,000 to ₹15,000 or more within weeks—without explicit consent.

A senior executive at a large QSR chain told Outlook Business: “It’s not about food quality or ratings anymore. It’s about who pays more.”

Algorithmic ranking further tilts the field. Zomato and Swiggy prioritize restaurants with fast prep times (20-25 minutes), high pickup success rates, and consistent delivery punctuality. Speed and operational excellence matter—but so does ad spend. Even a highly-rated restaurant with stellar reviews will rank below a mediocre competitor that buys visibility.

The Data You’ll Never See—Until Now

For years, one of the bitterest points of contention between restaurants and aggregators was data masking. Platforms hid all customer information—names, phone numbers, order histories, location data. Restaurants fulfilled orders without knowing who their repeat customers were, what their preferences looked like, or how to reach them directly. The data belonged entirely to Zomato and Swiggy, who used it to refine recommendations, personalize pricing, and build subscription programs like Zomato Gold and Swiggy One.

The National Restaurant Association of India (NRAI) filed a formal complaint with the Competition Commission of India (CCI) in 2021, alleging that data masking and other practices constituted anti-competitive behavior. In November 2024, after years of pushback—and competitive pressure from new entrant Rapido, which began sharing customer data with restaurants—Zomato agreed to pilot an opt-in data-sharing model. Swiggy is expected to follow.

Under the new system, customers will be prompted to consent before their contact details are shared with restaurants. If adopted widely, this could let restaurants build direct relationships, run targeted marketing, and reduce platform dependence. But the platforms retain immense control: the data is shared only with consent, usage is restricted, and the infrastructure—order flow, delivery logistics, payment processing—remains theirs.

Private Labels: When Your Partner Becomes Your Competitor

In 2024, Zomato launched Bistro, a 10-minute food delivery service under its quick-commerce arm Blinkit, offering snacks, beverages, and meals from third-party kitchens under Zomato’s own branding. Swiggy followed with Snacc, a similar quick-delivery service. Both platforms insist these are separate ventures, operating in distinct markets. But restaurant owners see it differently.

“They have all our data—nothing stops them from migrating a customer ordering a samosa or chai from Zomato to Bistro, maybe at a better price because they don’t have the pressure of high commissions,” said Sagar Daryani, president of NRAI and CEO of Wow! Momos.

The concern isn’t hypothetical. Zomato and Swiggy possess years of purchasing behavior data: which dishes sell best, at what price points, in which neighborhoods, at what times. With that intelligence, they can identify high-margin opportunities, source products from cloud kitchens at wholesale rates, and sell them under private labels—undercutting the very restaurants that built the demand. A live poll conducted during an NRAI town hall found that 70% of restaurant operators believe private labeling is harming their business.

Zomato CEO Deepinder Goyal has repeatedly insisted that Bistro “will not compete” with restaurant partners and that the Bistro team has no access to unfair data. But the optics are damning: the platforms charge restaurants 18-28% commission, while their own private-label kitchens pay nothing and enjoy zero delivery fees. It’s the Amazon playbook—act as a neutral marketplace, then launch your own competing products with built-in advantages.

Swiggy has since sold its private-label brands (The Bowl Company, Homely, Soul Rasa) to cloud kitchen operator Kouzina in a 2025 restructuring. Whether this signals a strategic retreat or simply a rebranding remains to be seen.

What It Means for Established Brands

For large QSR chains—McDonald’s, KFC, Domino’s, Burger King—the platforms are both essential and extractive. These brands have negotiated lower commission rates (around 15% versus the standard 20-28%), leveraging their scale and brand recognition. They can afford dedicated account managers, better promotional deals, and priority placement.

But even they feel the squeeze. Post-COVID, delivery orders now represent a much larger share of revenue—in some cases, 75% of total traffic is off-premises. That shift increases platform dependence while eroding margins. Brands with high delivery volumes face a double squeeze: 18-25% aggregator commissions plus the added burden of platform-driven discounts. Tech-enabled ordering and backend optimizations help, but they can’t fully offset the structural margin compression.

Established brands are responding by building direct ordering channels—proprietary apps, loyalty programs, and drive-through formats—to reclaim customer relationships and reduce platform reliance. Yet even here, the platforms retain leverage. When KFC suspended its own delivery service during peak pandemic months in favor of Swiggy and Zomato, it underscored a hard reality: the platforms own the delivery infrastructure, the customer interface, and the last mile.

What It Means for New Brands and Cloud Kitchens

For new entrants and small operators, the platforms are simultaneously a lifeline and a trap.

On the upside, Zomato and Swiggy offer instant distribution without capital investment. A cloud kitchen can launch with minimal overhead—no dining space, no waitstaff, no prime location—and immediately reach millions of potential customers. Partnering with delivery platforms provides access to logistics, payment infrastructure, and marketing reach that would take years and significant capital to build independently. For this reason, platforms are credited with increasing order volumes by 20-30% and expanding geographical reach.

On the downside, visibility requires continuous ad spend, profitability is elusive, and brand loyalty is nearly impossible to build. Small restaurants pay the highest commission rates, cannot negotiate better terms, and are forced into aggressive discounting just to compete. Without advertising, they remain invisible. With advertising, they burn cash. The result: many operate at a loss or barely break even, hoping volume will eventually translate to profitability.

A NCAER study found that while platform restaurants report higher total earnings, their profit margins are significantly lower than non-platform operators. The study also revealed that 35% of restaurants would exit the platforms if given a viable alternative—a staggering figure that underscores the sector’s discontent.

What It Means for Consumers

From the consumer’s perspective, Swiggy and Zomato have delivered unprecedented convenience, choice, and speed. You can order sushi, biryani, or pizza within minutes, track your delivery in real-time, and access thousands of restaurants from a single app. Over 60% of urban millennials now order food online at least once a week, and the industry’s growth has been fueled by affordability (discounts), variety (multiple cuisines), and ease (doorstep delivery).

But that convenience comes at a cost—literally. Platform fees have surged 600% in two years, from ₹2 per order in 2023 to ₹10-14 per order in 2025. These fees are regressive: a ₹200 order now carries a 7% surcharge, while a ₹800 order pays just 1.75%. Lower-income consumers pay proportionally more.

Restaurants, squeezed by commissions, pass costs onto customers by inflating menu prices on delivery apps compared to dine-in or direct ordering. A dish priced at ₹250 in-store may cost ₹300-350 on Zomato or Swiggy. Discounts mask this markup temporarily, but as platforms push toward profitability, expect discounts to shrink and delivery costs to rise further.

There’s also the illusion of choice. Sponsored listings and algorithmic curation mean you’re not seeing the best or most relevant restaurants—you’re seeing the ones that paid to be seen. And as platforms launch private labels like Bistro and Snacc, consumer choice narrows further: the marketplace operator is also a competitor, with structural advantages no independent restaurant can match.

Emerging Alternatives: ONDC and Direct Ordering

Recognizing the duopoly’s stranglehold, some stakeholders are turning to alternatives. The Open Network for Digital Commerce (ONDC)—a government-backed initiative—charges 10-11% commission versus the 25-30% charged by Swiggy and Zomato. Early adopters in Bangalore report that 20% of their deliveries now come through ONDC-connected apps like Magicpin, Paytm, and Tata Neu within just 6-9 months.

Direct ordering is another route. Restaurants are building their own websites, apps, and WhatsApp ordering channels to eliminate platform commissions entirely. Success stories like La Pinoz Pizza and Tossin Pizza show it’s possible: they’ve used targeted social media marketing, exclusive direct-order discounts, and loyalty programs to reduce platform dependence. But direct ordering requires upfront investment, digital marketing expertise, and customer acquisition muscle—barriers that smaller operators struggle to overcome.

Newer entrants like Rapido (with its Ownly food delivery service) are challenging the duopoly by offering fixed-fee pricing models and sharing customer data with restaurants. Whether these alternatives can scale remains an open question. Network effects, customer habit, and the sheer operational complexity of food delivery create high barriers to entry.

The Path Forward: Can Restaurants Reclaim Control?

The relationship between restaurants and delivery platforms is fundamentally asymmetric. Platforms control discovery, own the customer relationship, set the rules, and extract rents at every stage. Restaurants provide the product, absorb the risk, and bear the cost of thin or negative margins.

Yet the sector isn’t powerless. Smart operators are:

• Negotiating aggressively for lower commission rates if they have volume
• Optimizing menus for delivery—focusing on high-margin items, removing low-margin dishes, and adjusting portion sizes
• Building direct channels to reclaim customer data and reduce platform dependence
• Diversifying across platforms (ONDC, Rapido) to reduce reliance on the duopoly
• Tracking metrics obsessively —net profit per order, advertising ROI, refund rates—to identify what’s actually profitable

The NRAI’s legal battle with the CCI continues. In 2024, the CCI reportedly found that Zomato and Swiggy engaged in anti-competitive practices, including exclusive contracts, preferential treatment for select partners, and abuse of dominant market position. The investigation remains ongoing, and NRAI is preparing to update its complaint with additional evidence of private-label conflicts and data misuse.

Whether regulatory intervention can level the playing field is uncertain. What’s clear is that the current model is unsustainable for a large segment of the industry. Restaurants operate on thin margins, platforms extract value at every layer, and the race to the bottom—on pricing, on quality, on profitability—harms everyone except the duopoly.

Conclusion: Dependency or Partnership?

Swiggy and Zomato have reshaped India’s food industry. They’ve democratized access to delivery infrastructure, expanded consumer choice, and enabled thousands of cloud kitchens and small restaurants to reach customers they could never have accessed before. That contribution is real and significant.

But so is the cost. When 35% of your partners say they’d leave if they could, when advertising spend determines visibility more than food quality, when platforms mask customer data for years and then launch competing private labels—the relationship stops being a partnership and starts looking like extraction.

The question facing India’s restaurant industry isn’t whether to work with Swiggy and Zomato. For most operators, there’s no choice. The question is: how much control are you willing to give up, and what are you building to take it back?

Because in this ecosystem, the rent never stops rising—and the landlord sets the terms.

Originally published on Substack