Why Swiggy and Zomato Hurt Restaurant Profit Margins (And What You Can Do About It)

Introduction: The Hidden Cost of Convenience

Swiggy and Zomato have revolutionized food delivery in India—but at a serious cost to restaurants. While these platforms offer reach and convenience, they often end up eating into margins, eroding brand control, and blocking customer relationships.

If you’re a restaurant owner wondering why profits are shrinking despite growing online orders, this post is for you. We break down the real issues with aggregator dependency—and what smart restaurants are doing instead.

1. High Commission Fees Kill Profitability

Both Swiggy and Zomato charge 20%–30% commission on every order, not including taxes or delivery costs.

Example:

Order Value	Commission @ 25%	Delivery Cost	Your Net
₹400	₹100	₹40	₹260

That’s almost 35% wiped out per order. Now factor in packaging, discounts, rent, and staff salaries—it’s no surprise many restaurants lose money on every delivery.

2. You Don’t Own the Customer Relationship

When a customer orders via Swiggy or Zomato:

• You don’t get their phone number

• You can’t follow up or build a relationship

• You can’t run retargeting or loyalty offers

They’re not your customers—they belong to the platform.

3. Algorithm Bias Favors Ad Spenders

If you’re not running sponsored listings, your visibility tanks.

• Paid competitors get shown first

• Ratings, delivery speed, and even cuisine type can push you down

• You’re trapped in a “pay-to-play” loop

4. Fake Reviews & Rating Drops Hurt Credibility

Unfair or fake reviews from spam accounts or competitors can destroy your 4.5+ rating, pushing your listing down and hurting your trust with potential customers.

5. Packaging Costs Are Unavoidable (and Rising)

You’re expected to use spill-proof, food-grade packaging—costing ₹15–₹40 per order—but Swiggy/Zomato don’t subsidize it. It’s an invisible cost most restaurants ignore in their calculations.

What You Can Do Instead: 4 Real Solutions

✅ 1. Build Your Own Ordering Funnel

Use tools like DotPe, Petpooja, or Thrive to set up:

• Branded ordering website

• WhatsApp ordering flows

• In-store QR-based menus

You’ll save up to 25% per order, and keep your customer data.

✅ 2. Run Retargeting Campaigns

Once you control your funnel, you can run:

• WhatsApp re-engagement campaigns

• Meta Ads for past visitors

• Loyalty-based offers

Example: “Hey! Get 10% OFF your next order if you order directly from our site today.”

✅ 3. Reward Direct Ordering

Offer perks like:

• Free dessert on direct orders

• ₹50 OFF via WhatsApp orders

• Priority delivery for loyal customers

Make it worth their while to skip the aggregators.

✅ 4. Use Swiggy/Zomato Strategically (Not Exclusively)

We’re not saying to quit. Just optimize your use:

• Use aggregator ads only during off-peak times

• Run A/B tests on listings to see what boosts visibility

• Capture first-time customers—then nudge them to your own funnel next time

Final Thoughts: Take Back Control

Swiggy and Zomato are great for reach, but terrible for profitability and brand equity. The restaurants that win in 2025 will be those who leverage aggregators as acquisition channels—but build loyalty on their own terms.

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