The Aggregator Trap
How Food Delivery Platforms Are
Destroying
India’s Restaurant Ecosystem
A Wake-Up Call for India’s Food Industry
The Current Issues with Food Aggregators
India’s food industry — organised and
unorganised combined — was estimated at INR 5,52,000 crore by 2022. Local
restaurants, from fine dining establishments to neighbourhood eateries, provide
bulk employment across the country. Yet today, this entire ecosystem is being
systematically undermined by a handful of venture-funded aggregator platforms
whose sole objective is valuation growth, not sustainable business.
Let me walk you through the core issues that
are crippling the industry.
•
Unsustainably high
commissions (22–30% of every order)
•
Complete data masking — restaurants have zero visibility into who their
customers are
•
Deep discounting funded at the restaurant’s expense
•
Pay-to-play ranking that buries small restaurants
•
A manipulated review
system dominated by paid bloggers
•
One-sided, illogical
policies designed entirely in the
aggregator’s favour
How It Harms the End Customer
1. The
Discount Delusion
Customers are lured into a never-ending cycle
of “50% off” and “Buy 1, Get 1 Free” offers. These continuous discounts
undermine the quality and effort that goes into preparing food. They build a
perception that price is the only criterion that matters — not taste, not
hygiene, not craftsmanship.
Good food and great service have become
secondary. As long as there’s a discount, customers won’t question quality. And
when restaurants are forced to adapt to these discount pressures, it’s the
customer who ultimately suffers from sub-par food and deteriorating service.
2.
Loyalty Is Now Purchased, Not Earned
With programmes like “Gold” and similar
subscription offerings, customers develop a sense of entitlement — always
expecting something extra from the food provider without considering that every
small add-on costs the restaurant money. True loyalty, built over years of
personal association between a customer and their favourite restaurant, has
been replaced by a transactional subscription model.
3.
Customers End Up Paying More
After the initial honeymoon period of heavy
discounts, customers are gradually forced to pay significantly more than they
would have if they had ordered directly. The platform fees, surge pricing, and
reduced portions all add up.
4. A
Flood of Sub-Par Food
Every fly-by-night operator can get listed on
these platforms with attractive photos and rock-bottom prices, regardless of
food quality or hygiene standards. The same joints reappear under different
names every six months. The platforms call this “democratised listing.” I call
it a race to the bottom.
The Human Cost: Damage to Delivery Riders
These platforms make a great show of caring —
asking restaurants to offer riders a glass of water. But the reality of a
rider’s financial well-being tells a very different story.
Riders are squeezed to work at rates as low
as Rs 30 per trip for a 6-kilometre delivery — and that’s one way. They have to
ride back as well. This is on top of continuous exposure to road accidents, air
pollution, vehicle wear and tear, and working hours stretching up to 12 hours a
day.
Let’s
call it what it is: this is modern-day exploitation, and it needs urgent
reform.
The Devastating Impact on Restaurants
1.
Crushing Commissions
Commissions in the range of 22–25%, and
effectively up to 30% when you factor in all charges, are simply unimaginable.
They destroy the economics of running a restaurant. This level of extraction
has burnt every restaurant to the core, and it’s only a matter of time before
they start closing shop, one by one.
Bear in mind — these aggregators are also
charging the customer delivery fees and surge fees on top of this commission.
They’re earning from both sides.
2.
Cancelled Orders Fall on the Restaurant
When a customer cancels an order, the
restaurant bears the full cost. The food has already been prepared, the
ingredients consumed, the effort invested — and the aggregator washes its hands
of it entirely.
3.
Arbitrary and Punitive Penalties
These aggregators have assumed the role of
judge, jury, and executioner. They wake up one fine morning, change their
policies, and impose new penalties without consultation. Here are just a few
examples:
•
If an order is not accepted
within 2 minutes: penalty of Rs 10, then Rs 20 for each subsequent order.
•
Preparation time is
dictated by the aggregator, not the restaurant. Miss their arbitrary deadline,
and recurring penalties kick in every minute.
What
makes these platforms think a tandoor dish can be prepared in 15 minutes? Does
the restaurant exist solely to serve their orders?
Any customer complaint or liability going
forward will be borne by the restaurant — unless the restaurant purchases the
platform’s own overpriced hygiene certification. The platform plays the role of
owner when setting one-sided policies, then conveniently switches to being a
“broker” when liability comes into play.
And what about accountability for food that
may be tampered with during delivery by frustrated, underpaid riders? That
liability, too, falls squarely on the restaurant.
4. Data
Masking — The Great Information Heist
A broker should never enjoy the same
privileges as the owner. The sooner these platforms understand this, the better
for everyone.
Customer profiles are completely hidden from
restaurants. But the customer belongs to the restaurant — not the platform. The
app is merely a channel to reach the restaurant, nothing more.
Restaurants never know who they’re cooking
for, what the customer’s preferences are, or what they’ve ordered in the past.
Food is inherently personal — it’s made to suit individual tastes. By stripping
away this connection, the platforms reduce the dining experience to a soulless
transaction. Customers become nothing more than data points in a valuation
game.
5. The
Discount Burden Falls on Restaurants
Here’s the reality of those flashy “50% off,
up to Rs 50” banners: the bulk of the discount is borne by the restaurant, not
the aggregator. This is on top of the commissions, penalties, cancellation
costs, and customer complaint charges.
These platforms never push for quality or
excellence. It’s always about discounts, more restaurant sign-ups, and higher
valuations. Food quality is of absolutely no concern.
6.
Loyalty Programmes — A Tool to Extract Money
The customer pays Rs 1,000 to the aggregator
for a loyalty subscription. The aggregator then collects Rs 50,000 from the
restaurant to fund the “free meals” that loyalty members receive. The
restaurant pays to provide free food — when has this ever happened in the
history of the food industry?
They have even tried to get restaurant owners
to pay Rs 15,000 upfront to provide free food through their platform. And yet,
thousands of restaurants — in the lakhs — continue to fall into this trap.
7.
Pay-to-Play Advertising and Ranking
Google has survived for decades with its paid
and organic ranking model, and for the most part, it has been honest about the
distinction. These aggregators, however, continuously manipulate listings. Only
those who pay for advertisements get prominent placement.
Tomorrow, they will drive the user base
towards their own brands or exclusive tie-ups, making it yet another piece of
the valuation game.
8. The
Road to Total Control
I can see a future where these platforms
start dictating where restaurants source their raw materials and what they sell
at what price. Buy from their approved suppliers, and they’ll display a badge
on your listing. Refuse, and you’re buried in the rankings.
And here’s the endgame: these aggregators
already have their own cloud kitchens. They sell food cheap because they don’t
have to pay the 30% commission they extract from everyone else. They’ll
eventually drive all traffic to their own kitchens.
When
a platform sells meals at Rs 60–70 through its own subsidiary, that price is
simply impossible unless both entities belong to the same group. The conflict
of interest is glaring.
9.
Quality Restaurants Forced to Compete with Roadside Stalls
A fine dining restaurant or a quality eatery
that invests in ingredients, hygiene, and skilled chefs is placed on the same
listing as a roadside stall with no quality standards. The platform calls this
“democratised listing.” In practice, it punishes quality and rewards the
cheapest option.
10.
Unequal Treatment
These platforms maintain different policies
for large chains and small independent restaurants. Big names get preferential
treatment and relaxed enforcement; small restaurants get arm-twisted into
compliance.
11. The
Broken Review System
The review ecosystem has been hijacked by
paid bloggers who charge a fortune for their services, plus free food. Genuine
individual reviews carry little weight in the algorithm. The result is a review
system that serves the platform’s commercial interests rather than helping
customers make informed choices.
The Way Forward: A Call for Reform
The current trajectory is unsustainable. Here
is what needs to change:
1.
Cap on commissions — introduce a variable commission structure that is fair
and sustainable for restaurants.
2.
Transparent delivery
fees — delivery costs should be borne by
the customer, not disguised within the restaurant’s margin.
3.
Refund of exploitative
fees — all unjustified charges and
penalties collected from restaurants must be refunded.
4.
No forced discounting — discounts should be entirely at the restaurant’s
discretion, never imposed by the platform.
5.
Clearly marked paid
promotions — advertisements should be
limited to a clearly labelled top horizontal tile, with no more than four paid
slots.
6.
Transparent listing
algorithms — the ranking logic should be
made public and open to scrutiny, published on platforms like GitHub for
community audit.
7.
A fair review system — reviews should follow the Google model: transparent,
averaged, and free from hidden algorithmic manipulation.
8.
No competing with your
own partners — aggregators must not sell
food under their own brand or kitchen while hosting competing restaurants.
9.
Customer data belongs to
the restaurant — purchase history and
customer profiles must be shared with the restaurant (with customer consent)
and should never be retained by the aggregator for their own benefit.
A Final Word
I hope India’s restaurant
community will come together — not just to protest, but to build alternatives,
demand regulation, and create a fairer ecosystem. The aggregators have had
their way for far too long. It is time for the industry to reclaim its dignity,
its customers, and its future.
Let common sense prevail.