Is restaurant data truly safe with Swiggy and Zomato growing private-label ventures?

India’s quick-commerce and food delivery sector is undergoing a transformation, with two major aggregators like Swiggy and  Zomato expanding into private-label food brands. While these platforms originally operated as neutral marketplaces connecting consumers with restaurants, their increasing focus on owning and operating their own brands raises concerns over data privacy, fair competition, and marketplace neutrality.

Swiggy has launched Snacc while Zomato (via Blinkit) is aggressively pushing Bistro. Bistro and Snacc compete directly with the restaurants listed on Zomato and Swiggy apps. Unlike traditional food aggregators, which act as intermediaries between restaurants and customers, these platforms are now playing dual roles—acting as both marketplace providers and direct competitors to restaurant businesses.

The core concern revolves around data access and privacy. With deep insights into consumer preferences, order patterns, peak demand times, and best-performing cuisines, these companies have an unmatched advantage over independent restaurants. This access to sensitive market data raises the question—could this data be influencing their private-label strategies, giving them an unfair advantage? 

According to Thomas Fenn, Joint Secretary of the National Restaurant Association, the rise of 10-minute food delivery platforms like Bistro and Snacc creates an uneven playing field for restaurants. “These platforms source food from third-party kitchens, sell under private labels, and use marketplace data, giving them an unfair advantage. Nothing stops them from shifting customers to their own brands at lower prices, without bearing high commissions.”

Fenn emphasized the need for strict regulation, pointing out that Zomato and Swiggy leverage their scale to negotiate better prices and subsidize costs with investor money, making it difficult for local kiranas and restaurants to compete. “Price parity clauses further block competition. Stronger regulation, similar to Press Note 3 for retail, is needed to protect local businesses,” he added.

Addressing the concern of data sharing between Zomato and Bistro, Blinkit CEO Albinder Dhindsa clarified on X that Zomato will “never launch private brands on the Zomato app to compete with its restaurant partners.” He emphasised that Bistro operates as a separate entity with a standalone app, claiming that no Zomato restaurant data is being used, and the Zomato app will not be leveraged for its promotion. However, Entrackr’s investigation found a Bistro promotion banner on the Blinkit app, though not on Zomato. Industry experts point out that all three—Zomato, Blinkit, and Bistro—belong to the same parent company. Since they operate under the same corporate umbrella, it is difficult to verify whether data-sharing is happening internally or not. A similar pattern was observed on Swiggy, where the Snacc app was prominently promoted within the Swiggy app.

Through an Instagram post, Randheer who is a leading restaurant coach and mentor stated, these platforms that once served as intermediaries are now competing directly with the very businesses they host. With initiatives like Blinkit’s Bistro, Swiggy’s Snacc, and Zepto Café, these aggregators are no longer simply delivering food from partner restaurants; instead, they are producing and delivering their own food, effectively capturing a larger share of the value chain. This raises a critical question for restaurant owners—should they be concerned? Absolutely.”

Despite assurances from the founders that their private label businesses do not compete with restaurants listed on the food delivery apps and are not being leveraged for their marketing, the concerns still persist. The primary risk lies in the potential use of proprietary data and consumer intelligence from the main platforms, including insights into customer behavior, purchasing patterns, and market demand, which could provide these private labels with a strategic advantage over independent restaurant partners.

For restaurant owners, this uncertainty is a cause for concern. Could their business data be used to identify high-demand food items? which are then replicated by private-label brands backed by deep-pocketed aggregators? While no evidence of illegal data-sharing has been made public, the structural advantage of these platforms remains a competitive concern.

At the same time, some restaurant owners and the National Restaurant Association of India (NRAI) continue to express concerns, stating that the absence of regulatory oversight makes it difficult to verify above claims.

As per Reuters report in November 2024, a Competition Commission of India (CCI) investigation found that Zomato and SoftBank-backed Swiggy violated competition laws by favoring select restaurants. Citing non-public CCI documents, the report highlighted that Zomato entered exclusivity contracts for lower commissions, while Swiggy promised guaranteed business growth to restaurants listing exclusively on its platform.

NRAI, representing over 500,000 restaurants, has also approached the CCI against such practices. Entrackr reviewed NRAI’s petition, which alleges that Zomato and Swiggy’s practices violate Section 3(1) of the Competition Act. The matter remains under investigation.

According to Fenn, the CCI has acknowledged some of these issues in its report, but stronger and swifter regulatory intervention is necessary. 

Parallels with e-commerce and Press Note 3

This scenario is reminiscent of the regulatory crackdown on e-commerce giants Amazon and Flipkart, who faced similar scrutiny before India’s Department for Promotion of Industry and Internal Trade (DPIIT) introduced Press Note 3 regulations in 2016. These rules, which prevent foreign-funded e-commerce marketplaces from holding inventory, were implemented to stop marketplace operators from favoring their own sellers and gaining an unfair advantage through data access.

Amazon and Flipkart were accused of indirectly controlling preferred sellers, using deep business insights to push their own brands, and giving them unfair benefits in pricing and visibility. Now, food aggregators seem to be following a similar path, raising the question of whether a similar regulatory framework is needed to protect the restaurant industry.

Just as Amazon and Flipkart disrupted small retailers by shifting consumer spending online, and quick commerce platforms like Blinkit, Swiggy Instamart, and Zepto have significantly impacted neighborhood grocery stores by offering rapid delivery. Zomato and Swiggy’s private label expansion now threatens independent restaurants. By leveraging customer data and marketplace insights, these platforms can prioritize their own brands over partner restaurants, much like how e-commerce giants promoted their in-house products over third-party sellers. This shift mirrors the earlier retail and grocery disruptions, positioning food delivery platforms as both gatekeepers and competitors, potentially squeezing out small restaurants just as e-commerce and quick commerce did to offline businesses.

The restaurant industry is now at a crossroads. Will regulatory bodies like the Competition Commission of India (CCI) introduce new guidelines to ensure that food aggregators maintain a level playing field? Or will restaurants face the same challenges that independent sellers on e-commerce platforms faced before government intervention?

For now, restaurant owners are left in a position where they must trust aggregators to act fairly—without any clear regulations preventing potential misuse of their data.

Leading food delivery platforms in China and the U.S. have also expanded into private label businesses alongside their marketplace services. In China, giants like Meituan and Ele.me dominate, while DoorDash and Uber Eats have followed a similar path in the U.S. However, China’s regulatory framework is stricter, with the State Administration for Market Regulation (SAMR) fining Meituan $534 million in 2021 for anti-competitive practices. In contrast, the U.S. lacks specific regulations on private label operations, with oversight largely focused on labor rights, data privacy, and antitrust concerns.

Fenn  believes that the sector is in need of Pres note 3 kind of regulation which barred foreign-funded e-commerce marketplaces (Amazon and Flipkart) from having any sort of inventory-led play.  “Just like Press Note 3 protected retail marketplaces, a similar policy must address food delivery platforms, regardless of whether they are foreign or Indian-owned. Without regulation, we risk losing local businesses and becoming dependent on two players,” he said.

Entrackr reached out to Swiggy and Zomato with a detailed set of questions regarding concerns over potential data-sharing practices involving restaurant insights. Zomato declined to comment, while queries sent to Swiggy three weeks ago did not receive a response.

The road ahead

Even as the platforms have been at pains to claim a chinese wall between operations, or offering a truly limited menu for now, that is certainly no guarantee for the future. Quite simply, the decision is devoid of logic or good faith by most parameters, if one looks at the pitch of these to restaurant owners, and the relationship they share. 

The government should establish clear regulations to ensure marketplace neutrality in the food delivery industry too, similar to how e-commerce platforms were scrutinised for favouring in-house brands over independent sellers. The regulation must include mandatory data transparency, where platforms must disclose how consumer insights are used and there should be strict separation of marketplace and private label operations to prevent conflicts of interest. 

With CCI already investigating Swiggy and Zomato over anti-competitive practices, the issue of data protection and marketplace neutrality may soon enter the regulatory spotlight.