Indian online food delivery company Swiggy is likely to face a major setback in Bengaluru, with the Bangalore Hotels Association (BHA) warning that hotels affiliated with it and several other hospitality bodies may stop accepting orders through the platform from August 15. The association has accused the food delivery company of multiple financial irregularities, including a lack of transparency in payouts, unauthorised deductions and advertisement-related charges.
In a statement issued on Wednesday, the association said it has given Swiggy one final opportunity to address its concerns through discussions. If the company fails to take corrective steps before Independence Day, member hotels across Bengaluru have unanimously decided to suspend business with the platform, the statement said. "Failing this, all our associations in Bengaluru have unanimously decided to suspend all business with Swiggy from August 15," the association said in its press release," it added.
Hotels allege unauthorised advertisement charges
One of the key issues raised by the association relates to promotional and advertising expenses that it claims are being deducted without prior approval from restaurant owners. According to the BHA, Swiggy has allegedly been enrolling restaurants into Cost Per Click (CPC), Cost Per Acquisition (CPA) and promoted advertisement campaigns without obtaining written or digital consent. The association has demanded that restaurants be given a simple one-click option to opt out of such promotional campaigns without incurring any further charges. The body argues that businesses should have complete control over whether they participate in paid promotional activities.
Demand for transparent payout statements
The association has also sought greater transparency in the way Swiggy presents payment statements to its restaurant partners. It has demanded that every deduction, including commission, GST, CPC advertisement charges, promotional expenses and discounts, be displayed separately so that restaurant owners can clearly understand how their final payouts are calculated.
The BHA has further objected to service charges allegedly being levied on the GST amount collected from customers before it is remitted to the government. According to the association, these deductions and accounting discrepancies have significantly reduced restaurant earnings, with several businesses reportedly receiving less than half of the billed order value.
'Restaurants getting only Rs 40,000 to Rs 50,000 against Rs 1 lakh'
Speaking to PTI, BHA Honorary President P C Rao said the association's biggest concern is the platform's payout mechanism. "The main issue is that the payment and payout system is not functioning properly. There are too many deductions," he said. Rao clarified that restaurant owners are not objecting to Swiggy's standard service fee but are questioning several additional deductions.
"We have no objection to the service charge. Whatever the service charge is, they can take it. But apart from that, they impose additional service charges, payout charges, advertisement charges, map-up charges, and various other charges without our permission, and deduct them," he said.
He further alleged that in some cases restaurants receive only Rs 40,000 to Rs 50,000 against payouts worth Rs 1 lakh, despite repeatedly raising the matter with the company.
Association leaves room for talks before August 15
Despite issuing the boycott warning, the association has indicated that discussions with Swiggy are still possible. "If they rectify the issues within the next 15 days and conduct business properly going forward, we will continue to work with them. Otherwise, we don't have any other option; we'll come out," Rao said. He also clarified that member hotels have not yet suspended their services and that a final decision will only be taken on August 15 if the issues remain unresolved.
Will customers be affected?
The association said any decision to discontinue Swiggy services would be implemented in a way that minimises inconvenience to customers. It added that member restaurants would explore alternative arrangements wherever possible to continue serving consumers. As of now, Swiggy has not issued an official response to the allegations or the boycott warning.
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