Zomato withdraws exclusivity for restaurants under cloud kitchen biz

Zomato has withdrawn exclusivity rights for restaurants under its cloud kitchen business. This move will allow restaurants to list on the food delivery company’s competitors, including Swiggy.

The food delivery platform was giving advertising rates at a steep discount to the restaurants using its cloud kitchen business. Due to this, the firm was losing revenue it could have gained from restaurants willing to pay higher costs.

The source said, “By allowing these restaurants to list on Swiggy, Zomato can now earn incremental rental revenue from sales with zero opportunity cost.”

The company has also added some conditions after withdrawing the exclusivity clause.

The chief executive of a brand that uses Zomato’s cloud kitchen stated, “Asking for exclusivity only makes sense if you can push a lot of demand your way, which was possible with aggressive discounting, but not at a sustainable profitable level.”

Zomato told brands in the email, “You need to ensure that your menu spread pricing and promotions on Zomato are equal to or better than that on your platform/third platforms.”

Why is food delivery trending?

In India, food trends are continuously changing with the change in eating habits of the ever-demanding consumers and the new concepts heating up the million-dollar food service industry.

From going to a restaurant over dinner or lunch, people today look out for delivery and getting their favorite food delivered to their doorstep. Similarly, rather than going to the grocery store to buy raw materials first and then cook them, customers can push a button and have their meal delivered in around 30 minutes from some of their favorite restaurants.

Seeking this opportunity not only the aggregators or delivery players who started this trend are betting big on this model but restaurants and food players are also eyeing this as the next ground to invest in.

Pros of food delivery

Placing orders online or on such apps proved beneficial for everyone. There are special discounts for new customers or discounts at various restaurants, always going on. A restaurant finder app can easily help you avail such discounts.

Brands and outlets have also started tying up with food delivery and hyperlocal mobile as getting listed on third-party Aggregators has proven very fruitful for them.