Food delivery platforms have become too important for restaurants to walk away from easily, even as commissions climb and frustrations simmer.

A joint report by the National Council of Applied Economic Research (NCAER) and Prosus, titled 'Impact of Food Delivery Platforms on Restaurants', shows a sector caught in a bind. Restaurants rely more than ever on platforms for revenue and reach, but a sizeable chunk want the terms to change, especially on commissions. The study surveyed 640 restaurants spread across 28 cities.

Rising commissions, limited exits

The sharpest point of friction is commissions. The average per-order commission charged by food delivery platforms has jumped from 9.6% in 2019 to 24.6% in 2023. Around 30% of platform restaurants explicitly said they want a reduction in per-order commissions, along with greater transparency and flexibility in how commissions are structured.

Despite this, only 35.4% of platform restaurants said they would stop using food delivery platforms altogether. The reasons cited by those considering an exit were telling: high commissions, poor customer service, and platforms not delivering enough profits, orders, or customers.

This reluctance to leave reflects the growing dependence on platforms. The average share of restaurant revenue coming from food delivery platforms has increased from 22.1% to 28.8%. For small restaurants, the reliance is even higher - about one-third of their revenue came from platforms in 2023. The same was true for restaurants in Tier 3 cities, though these locations have started to see a decline in platform-led revenue after peaking during the pandemic.

Transparency gaps and uneven bargaining power

While commissions dominate the conversation, the report also highlights gaps in understanding how platform charges work. Only 55% of platform restaurants said platforms explained how payments were computed. Awareness around onboarding fees was even lower. The average onboarding fee stood at Rs 1,841.8, with variations across cities, but 70.9% of restaurants did not respond when asked whether they paid a single fee for all services or separate fees for delivery, discovery, order management, and payments, suggesting limited clarity on cost structures.

Restaurants’ ability to negotiate commissions appears uneven. Medium and large restaurants were found to have relatively more negotiating power, while smaller outlets had less leverage. Overall, evidence on negotiating power and understanding of commission structures was described as mixed.

Perceptions of fairness also reflect this ambiguity. About 47.1% of restaurants felt platform practices were neither fair nor unfair, while 35% perceived them as either fair or completely fair. Nearly half, 49.6%, found grievance redressal mechanisms either helpful or very helpful.

Why restaurants stay on

For all the complaints, platforms continue to offer tangible benefits. About 67% of restaurants said the biggest advantage of joining platforms was being part of a larger network that improves matching between customers and restaurants. Increased customer reach, advertising support, assurance of quality for consumers, expansion of operations, and improved online presence were also cited as key gains.

Platforms have also helped restaurants stretch their business hours. While 32.3% of restaurants said peak demand for dine-in and platform delivery coincided, 67.7% said they were different, meaning platforms helped extend peak hours rather than cannibalise existing demand.

Financially, platform restaurants reported higher net profits than non-platform restaurants, though their net profit margins were lower. “Platform restaurants have higher net profits than non-platform restaurants but lower net profit margins. There were both monetary and non-monetary gains from joining food delivery platforms,” the report noted.

What this really means is that commissions may be under fire, but platforms remain deeply embedded in how India’s restaurants operate. For now, most are choosing to negotiate, adapt, and stay put rather than walk away.