Why ONDC Delivers Food At Cheaper Rates Than Zomato And Swiggy

Food delivery platforms Swiggy and Zomato are the go-to apps for many who want special cuisines and delicacies delivered to their doorsteps. However, we have another food aggregator in town – ONDC. But, there’s a catch. The ONDC food delivery platform has emerged as a tough competition to Swiggy and Zomato because of its exceptionally low prices. Besides, it is a government-backed platform offering similar services.

Recently, India’s top restaurateurs Riyaaz Amlani (founder of Social, Smoke House Deli, Boss Burger, etc.) and Zorawar Kalra (founder of Masala Library, Farzi Cafe, Louis Burger, etc.) came out to extend their support to ONDC. During an interaction with Zerodha’s Chief Investment Officer Nikhil Kamath, the restaurateurs revealed the reason behind the lesser payable amount on ONDC as they noted that Zomato and Swiggy charge 55 per cent of their order values whereas ONDC takes a small chunk of the order.

Amlani informed, “This is a triple D model. It’s not just delivery cost, but also discovery cost which means that you are paying to be visible in a carousel, to be visible in one of those collections” adding that the charges levied on food delivery, when going beyond 12 per cent, aren’t sustainable for restaurants.

Explaining further, Amlani said, “You easily spend about 12 per cent more on that. On top of that, your average discounting is at 14-15 per cent. If you don’t discount, customers don’t come to you. That’s the way it has been. So, 55 per cent of your margin is taken by aggregators.”

Kalra, who agreed to Amlani’s claims, also noted that the restaurants are pressurised by these companies to put up discounts that may impact the end customer if continued for a longer duration.

Kalra noted, “Discounting has become an addiction and that’s never a good thing. Whenever you build an entire system around discounts, eventually the consumer suffers. The funding of the discounts is happening at the cost of the discounts.”

Both restaurateurs found ONDC more convenient as it does not charge high commissions.