NRAI Accuses Zomato and Swiggy of Undermining Restaurants with Private-Label Food Services

The National Restaurant Association of India (NRAI) has raised serious concerns over Zomato and Swiggy’s growing involvement in private-label food delivery. According to the NRAI, both companies are using their dominant market positions and access to restaurant data to create and promote private-label food products, either directly or through subsidiaries like Blinkit Bistro and Swiggy SNACC.

Initially established as neutral marketplace platforms, Zomato and Swiggy are now venturing into food delivery, competing with the very restaurants that rely on their services. This move, the NRAI claims, undermines fair competition and breaches the trust restaurants placed in these platforms.

NRAI President Sagar Daryani, also the CEO of Wow Momo!, expressed his disapproval, saying, “We were always given verbal assurances that private labelling would not be pursued. This development is a breach of that trust.” Daryani also highlighted concerns over “consumer masking,” where restaurants are unable to access customer data collected by these platforms.

The industry body, which represents over 500,000 restaurants across India, argued that this strategy violates marketplace neutrality. It further raised legal questions under the Copyright Act and related laws, emphasizing that Zomato and Swiggy’s actions create a conflict of interest by using restaurant data to launch competing products.

With the Indian restaurant industry valued at ₹5.69 lakh crore, the NRAI has warned that the rise of private-label food delivery could pose a serious threat to the survival of restaurants. The association is seeking legal remedies and calls on regulators, restaurants, and customers to uphold ethical practices in the competitive food delivery space.

In response to growing consumer demand, both Zomato and Swiggy have expanded their services. Swiggy recently launched SNACC, a new app for delivering snacks and meals within 15 minutes. Meanwhile, Zomato’s Blinkit introduced “Bistro,” offering snacks, meals, and drinks within a 10-minute delivery window. Additionally, Zomato now features a 15-minute food delivery option in select cities, focusing on ready-to-eat meals sourced from nearby restaurants.

While these quick-service offerings meet the demand for convenience, they also intensify the competition faced by traditional restaurants, which are struggling to keep up with the changing dynamics of the food delivery industry.

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