A look at the growing tensions between food delivery apps like Zomato and Swiggy in India and restaurants frustrated by their steep commissions and discounts
Context & Ripple Effects
In 2019, India's food delivery market was a two-horse race between Zomato and Swiggy, both growing through deep consumer discounts funded by investor cash — and both charging restaurants steep commissions while mandating participation in those discounts. The New York Times piece captures the moment restaurants began openly revolting against an arrangement where they absorbed margin damage to subsidize platform growth.
The arc since then validates the grievance: some restaurants migrated to direct-order services like DotPe specifically to escape commissions and reclaim customer data (restaurants moving to direct-order services), continued cash-burn pushed both leaders to diversify beyond delivery (Swiggy and Zomato exploring other business areas amid cash-burn), and by 2025 even a state-backed alternative had failed to dent the pair's grip (ONDC struggling to break the near-duopoly).
First-order effects
- Restaurants on Zomato and Swiggy face a squeeze on two fronts at once — per-order commissions plus mandatory discount funding — making listed menu prices unprofitable and pushing some toward public pushback rather than quiet exit.
- The platforms' discount-led growth model depends on restaurant participation, so organized restaurant dissatisfaction directly threatens the supply side of both marketplaces.
Second-order effects
- Lower-commission direct-ordering tools such as DotPe gain a ready-made selling point — lower fees plus access to customer data the aggregators withhold — turning restaurant frustration into a competing channel.
- With cash-burn unsustainable, Zomato and Swiggy are forced to look beyond core delivery for revenue, spreading their bets across adjacent business lines rather than raising take rates further.
Third-order effects
- If the pattern holds, India's online food delivery settles into a durable near-duopoly that alternatives struggle to crack — even a government-backed open network cutting discounts has not displaced the incumbents — leaving restaurants negotiating from weakness on commissions.
- The recurring fault line becomes structural: whoever owns the customer relationship owns the data and the pricing power, so restaurants' long-term counter is disintermediation rather than fee negotiation.
The trend: India's food delivery market is consolidating around a Zomato-Swiggy duopoly whose discount-funded growth keeps colliding with restaurant economics, spawning direct-ordering and open-network alternatives that so far have not broken the incumbents' hold.