The Federation of Hotel & Restaurant Associations of India (FHRAI) has expressed serious concerns over the recent entry of Zomato and Swiggy into the private label food delivery business, calling out the platforms for alleged misuse of restaurant data, unfair competition, and potential food safety risks.

As the third-largest hospitality association in the world, FHRAI has taken a firm stance, highlighting how these platforms, initially designed to connect restaurants with customers, are now directly competing with the very businesses they were meant to support. In response, FHRAI plans to meet with the Ministry of Commerce to push for regulatory action and ensure fair practices in the food service industry.

Unfair Competition and Data Misuse

Pradeep Shetty, Vice President of FHRAI, noted that platforms like Zomato and Swiggy are leveraging proprietary restaurant data, including customer preferences, order histories, and sales trends, to promote their own private label food products. "This practice represents a direct violation of e-commerce regulations. These platforms were supposed to function as neutral marketplaces but are now using years of restaurant data to develop competing products while excluding restaurants from accessing this critical information," Shetty remarked.

This puts small and medium-sized restaurants at a severe disadvantage, threatening their survival. The lack of proper consent for the use of this data also raises serious ethical and legal concerns.

Food Safety Concerns

FHRAI also raised alarms about the transparency of food safety standards for private label products. Unlike restaurants, which are required to adhere to stringent regulations, there is no clarity on whether these platforms comply with the same standards for their own products. Shetty added, "This lack of oversight not only risks consumer trust but also harms the reputation of the restaurant industry."

Monopolistic Practices and Call for Action

By venturing into quick commerce and private label food products, Zomato and Swiggy are now controlling both the distribution and creation of food, leading to fears of monopolistic practices. The FHRAI emphasized the urgent need for clear guidelines to ensure a level playing field, safeguard restaurant data, and uphold food safety standards for all stakeholders.

About FHRAI

The Federation of Hotel & Restaurant Associations of India (FHRAI), established in 1955, is the apex body of India's hospitality industry. As the third-largest hospitality association globally, it serves as the voice of the hotel and restaurant industry, advocating for fair policies and fostering the growth of the hospitality and tourism sectors.

By addressing these critical issues, FHRAI aims to protect the interests of restaurants, ensure consumer safety, and maintain trust in the food delivery ecosystem. The association is urging regulators to act swiftly to mitigate the risks posed by these new developments in the food delivery market.