INDIA—Food delivery platform Swiggy has revealed changes to its service fee policy, which will include charges based on gross order value, including packaging as well as goods and service tax on its restaurant partners.
The new changes are expected to increase the commission paid by its restaurant partners. The service fee was previously levied on the net value of its restaurant partners. However, some of its partners in highly populated major towns were already charged commissions on gross order value.
The new commission charges will immediately impact at least 1,000 of its restaurant partners, especially those in rural areas and small towns. This is because partner contracts are on an individual basis.
The changes are expected to affect more partners in the future as it conducts an individual review on charges offered to all its restaurant partners.
However, the latest move is expected to bring uniformity in charges across gross value orders across 350,000 restaurants listed on the company’s platform.
In a letter to its restaurant partners, Swiggy said, “The recent communication from Swiggy was intended for a small subset of partners, basis discussions, and is fairly routine as different partners have commercial arrangements based on their needs.”
“We have multiple channels available for partners to discuss all issues with us.”
However, the move has sparked debate among its restaurant partners, with some arguing a huge proportion of partners will be negatively affected.
Some partners argue the new commission policy is not sustainable because of the current market environment.
Restaurants have faced increasing cost pressure stemming from high inflation, which has driven up the cost of ingredients and key raw materials.
Restaurants and QSR chains have resorted to value deals, discounts and other forms of competitive pricing to attract and retain a dwindling customer base as cash-strapped customers become more price-conscious and eat out less.
The new commission policy is seen as a juxtaposition to this knee-jerk reaction by QSR chains, resulting in even higher prices offered to customers.
The delivery platform has yet to respond to these complaints or provide an alternative solution to its partners.
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