Food aggregators add Rs 12,000 crore annual burden to Indian households | News
The ease of access to instant delivery may be saving time, but the cost is increasing household expenses. According to a report, all the premiums charged by major food aggregators in India generate an overall annual ecosystem cost of Rs 9,000 – 11,000 crore.
The report by Maverick India, an integrated marketing agency, found that the aggregators’ pricing models have tiny layers of seemingly negligible amounts worked into them in a manner that may or may not pinch the consumers’ pockets at that moment.
Its latest research report, “Food Delivery Unwrapped: Uncovering Hidden Costs on India’s Aggregator Platforms”, built on the analysis of data across three major platforms—Swiggy, Zomato, and Magic Pin—sheds light on the price inflation and hidden costs embedded in food aggregator services, including delivery fees, packaging charges, and the marginal utility of premium subscriptions like Zomato Gold. It compares these with the more transparent pricing on restaurant-owned delivery platforms and reveals significant disparities.
The report reveals an average aggregator premium of Rs 46 per dish (in hidden costs) compared to delivery orders placed on restaurants’ own channels. Conservatively, this translates to an additional annual financial burden of at least Rs 12,000 for the average Indian household in major metro and Tier-1 cities.
Incremental differences in fees, such as 150-200% higher delivery charges, are significant, and the cumulative financial impact can be substantial for consumers. While 46% of restaurants don’t charge any delivery fees on their owned channels, most do on aggregator platforms.
Packaging charges are another issue. Food aggregators charge Rs 2 more for packaging than restaurants, even though the packaging remains the same. When added up, this seemingly insignificant charge accounts for Rs 400 crore of the annual ecosystem revenues.
The study also found that premium subscriptions do not bring any savings, with non-members often accessing similar benefits for orders over Rs 199. Delivery fees for dine-in restaurants are Rs 6.5 higher on average compared to delivery-first restaurants on aggregator platforms.
Chetan Mahajan, founder and CEO of Mavericks India, said, “As convenience drives more consumers towards food aggregators, the hidden costs of delivery, packaging, and perceived membership benefits can often add up to a significant financial drain over time. According to behavioural economics, consumers are more likely to accept dispersed, smaller fees than a large lump sum, which potentially explains the cost breakdown of these aggregators. Our report not only breaks down these costs but also advocates for greater transparency. Consumers should be able to make informed decisions about their spending.”
To uncover these hidden costs, the report analysed price data from over 50 restaurants, spanning vegetarian and non-vegetarian dishes, across the three aggregator platforms and compared them to prices on the restaurants’ own platforms. Each item was added to the cart one at a time to capture the most accurate pricing data and maintain consistency.
First Published: Sep 18 2024 | 5:52 PM IST
