The decision comes at a time when rival Zomato has approached a number of restaurant chains seeking a 2-6% increase in commissions, as ET reported first on February 27.
Swiggy said restaurant partners can potentially save up to Rs 20,000 through this initiative. As many as a quarter million restaurant partners are on board Swiggy’s marketplace platform and the company said it adds about 10,000 new restaurants every month.
The offer also includes support in the form of a dedicated growth manager, free advertisements on the Swiggy app, extended delivery radius, apps to manage business performance and online menus, as well as data and insights through business intelligence dashboards for these restaurants, the Bengaluru-based firm said.
Commission from restaurants is the main source of revenue for online food-delivery players.
“We are consistently looking at avenues to encourage new food entrepreneurs to experience online food delivery,” said Rohit Kapoor, chief executive of food marketplace at Swiggy. “With 0% commissions for the first month of their operations, we hope more restaurants, cloud kitchens, and other food entrepreneurs feel confident about online food delivery and take the plunge.”
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Cost-cutting drive
The move is significant because the SoftBank-backed company is cutting costs across the board to help improve profitability amid slow growth in the food-delivery sector and a tough funding environment. According to a research note by investment banking firm Jefferies, Swiggy lagged behind Zomato in terms of market share in the first half of 2022, even as it offered higher discounts.
Swiggy has sold its cloud kitchen business, Swiggy Access, to Loyal Hospitality, which rents out cloud kitchens under the brand Kitchens@. On January 20, the company said it would be shutting down its meat delivery business and laying off more than 300 people.
The company also recently tightened its password-sharing policy for its Swiggy One users, which offers free deliveries across Instamart and DineOut, limiting multiple logins across devices.
Prosus, one of the largest investors in Swiggy, said in a regulatory filing in November last year that its share of Swiggy’s trading loss increased to $105 million, from $34 million, driven by investments to increase growth in both the core food delivery business and in Instamart. This translated to a burn of over $300 million for the six months that ended in September 2022.
Even as the company is cutting down on costs and improving profitability, it recently launched several new units, including premium grocery delivery service Handpicked, direct-to-commerce ecommerce marketplace Minis and restaurant table reservation service DineOut. It also rebranded its milk and dairy products delivery business, Supr Daily, to a premium grocery delivery business called Insanely Good.
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