Discount Strategies of Online Food Delivery Platforms and Their Impact on the Profitability of Local Restaurants: An Empirical Study of Zomato and Swiggy Partner Restaurants in Hyderabad

This study set out to examine whether discount strategies used by Zomato and Swiggy have a measurable impact on the profitability of local restaurants in Hyderabad. The evidence gathered from 100 restaurant operators points to a consistent and statistically significant answer: discounting, combined with high commission slabs, meaningfully erodes restaurant profitability even as it sustains or increases order volume. The chi-square test conducted on the study's central profitability variable confirms that this erosion is not a matter of isolated complaint but a broadly shared and statistically robust experience across the sample. The underlying dynamic can be described as a volume-margin paradox. Aggregator platforms succeed in bringing customers to a restaurant's digital storefront, but the algorithmic and commercial architecture built around that access, high commissions, near-mandatory discounting, and restricted data sharing, ensures that a large share of the resulting revenue is captured by the platform rather than retained by the restaurant. For small, independent restaurants that lack the scale, brand strength or negotiating power of large chains, this arrangement functions less as a growth partnership and more as a structural constraint on long-term financial sustainability. The findings carry implications for restaurant owners, industry bodies and policymakers alike. For restaurant owners, the study points toward practical, restaurant-level responses, dual pricing, selective discounting, and direct-channel investment, that can help rebalance the volume-margin trade-off without abandoning the discovery benefits that aggregators genuinely provide. For industry associations and policymakers, the findings add empirical weight to ongoing conversations around platform commission regulation and the promotion of lower-cost alternatives such as ONDC. Ultimately, the sustainability of India's independent restaurant sector in the platform era will depend on restaurants, platforms and regulators together finding a more balanced distribution of the value that online food delivery creates. 

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