According to a letter seen by Reuters, the Domino’s Pizza India franchise will consider moving some of its business away from popular food delivery apps, Zomato and SoftBank-backed Swiggy, if their commissions rise further.
Jubilant Foodworks, which runs Domino’s and Dunkin’ Donuts chains in India, disclosed this in a confidential filing to the Competition Commission of India (CCI), which is probing Zomato and Swiggy’s alleged anti-competitive practices.
Jubilant is India’s largest food service company with over 1,600 branded restaurant outlets – including 1,567 Domino’s and 28 Dunkin’ outlets.
The CCI had ordered a probe into Zomato and Swiggy in April after an Indian restaurant group alleged preferential treatment, exorbitant commissions and other anti-competitive practices. Food delivery apps deny any wrongdoing.
After the CCI sought answers from the Domino’s India franchise and several other restaurants as part of its investigation, Jubilant told the watchdog this month that 26-27% of its total business in India originated from online platforms, in which its Includes its mobile application and website.
“In case of increase in commission rates, Jubilant will consider shifting more of its businesses from online restaurant platform to in-house ordering system,” the company said in its July 19 letter addressed to CCI.
A spokesperson for Jubilant FoodWorks declined to comment, while CCI did not immediately respond. Zomato and Swiggy, backed by China’s Ant Group, also did not respond.
With the increasing usage of smartphones and attractive discounts on offer, food delivery platforms have become increasingly popular in India. Jubilant’s warning comes after Zomato and Swiggy are accused by several restaurants in India that their alleged practices have hurt their business.
The CCI case began with a complaint by the National Restaurant Association of India, which has over 500,000 members, and alleged that the commission charged by Zomato and Swiggy in the range of 20% to 30% was “unviable”.
A senior industry executive with direct knowledge said the commissions of Zomato and Swiggy were a matter of concern for Domino’s and several other restaurants.
“If the commission is hiked further, it will reduce the profits of the traders and it will be passed on to the consumers only,” the executive said on condition of anonymity.
Before the investigation was announced, Zomato told the CCI that it negotiates and takes commission from the restaurant, but it has nothing to do with how the listing appears on its app.
Swiggy said its commissions are determined by factors such as the popularity of a restaurant or the volume of orders, as opposed to the watchdog’s initial order.