NRAI accuses Swiggy, Zomato of ‘abuse of power’ over private-label food apps

The National Restaurant Association of India (NRAI) has criticised Swiggy and Zomato for launching private-label food delivery apps, alleging unfair practices and breach of trust. The NRAI claims that these aggregators, originally intended to support restaurants by enabling deliveries, are now directly competing with them.

Sagar Daryani, President of the NRAI, called the move “sheer abuse of power” in a statement to CNBC-TV18. “Aggregators are supposed to facilitate the food business by ensuring delivery, but launching their own food apps like Snacc by Swiggy and Bistro by Blinkit is unacceptable,” Daryani said.

The NRAI outlined several concerns, primarily focusing on the misuse of data by Swiggy and Zomato. According to Daryani, these companies collect detailed data from partner restaurants but refuse to share it, giving them a significant advantage. “They know exactly who our customers are, while we face consumer masking. They can easily divert traffic to their apps and sell similar products under their private labels,” he said.

Smaller restaurants, Daryani warned, face the harshest impact. “For small players selling chai or biryani in a locality, this is devastating. They’re forced to compete with the very platforms they rely on for delivery. It’s not a level playing field,” he added.

Daryani also accused Swiggy and Zomato of reneging on prior verbal assurances to the NRAI that they would not venture into direct food sales. “We feel backstabbed,” he said. “These were promises made during past conversations, yet Snacc and Bistro are already operational.”

The NRAI is now considering legal action, including adding these concerns to an ongoing Competition Commission of India (CCI) probe or filing separate lawsuits. “We cannot wait and watch while our business gets obstructed. An injunction or other legal measures are definitely on the table,” Daryani asserted.

The restaurant industry is already struggling with high commissions, deep discounting, and flash sales imposed by food aggregators. The introduction of private-label apps exacerbates these challenges. “Margins in online food delivery are almost non-existent. Adding direct competition from aggregators will make survival impossible for many small operators,” Daryani warned.

He also cited regulatory parallels in India’s e-commerce sector, where platforms like Flipkart face restrictions on selling private labels. “If e-commerce giants aren’t allowed to do it, why should Zomato and Swiggy be any different?” he questioned.