Food aggregator apps can be more expensive than ordering food from restaurant directly. (Photo: iStock)
Ordering food online via food delivery apps is one of the most convenient and widely-used options for people, especially in major metro cities, to get some quick and delicious food without entering the kitchen. However, using these food aggregator apps adds to the costs of consumers in Indian households, compared to ordering the same food directly from restaurants. This surprising finding was reported in a recent research report titled ‘Food Delivery Unwrapped: Uncovering Hidden Costs on India’s Aggregator Platforms’ by The Mavericks India, an integrated marketing agency.
The report brings to light how the aggregators’ pricing models include seemingly insignificant fees that may not pinch consumers’ pockets at that moment, but add up over time, “significantly affecting household budgets.”
The report analysed pricing data from over 50 restaurants on Swiggy, Zomato, and Magic Pin, alongside restaurants’ own delivery channels as of August 21, 2024. This includes base price, delivery fees, GST, packaging charges, and additional surcharges.
The report found that consumers pay an average 11% premium when using popular food delivery apps over direct restaurant ordering. This means aggregator platforms add an average premium of ₹ 46 per dish (in hidden costs) compared to delivery orders placed on restaurants’ channels. This translates to an additional annual financial burden of at least ₹ 12,000 for the average Indian household in major metro/tier-1 cities. All the premiums charged by major food aggregators in India generate an overall annual ecosystem cost of ₹ 9,000-11,000 crore, according to the report.
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Aggregator platforms charge delivery fees that are 150-200% higher than those of restaurants’ own channels, as per the report. Notably, 46% of surveyed restaurants do not charge any delivery fee through their own channels, while almost all charge a delivery fee on aggregator platforms.
Packaging charges also present a concern. Food aggregators charge ₹ 2 more for packaging than restaurants, despite the packaging being identical. Over time, this seemingly minor charge contributes to ₹ 400 crore in annual ecosystem revenues.
When it comes to food options, desserts on aggregator platforms are consistently priced at a premium of up to 15% compared to ordering directly from restaurants. Vegetarian dishes see an 11% price increase on aggregator platforms, even though only 25% of customers are vegetarian.
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Chain restaurants with multiple locations typically charge lower delivery and packaging fees. However, the report notes that aggregators usually do not pass these savings on to consumers, maintaining relatively consistent pricing across different types of establishments. Meanwhile, dine-in restaurants face an average delivery fee that is ₹ 6.5 higher, which may suggest a pricing strategy based on perceived premium status or customer’s willingness to pay.
The study also evaluated the value proposition of premium subscriptions offered by aggregator platforms. It found that these subscriptions often offer limited added value, particularly for orders over ₹ 199, where non-subscribed users can access similar benefits without needing a subscription.
