BENGALURU: To win over customers and popularize business, food startups in 2015 heavily subsidized delivery rates for most restaurants. This year, the scene is going to be exactly opposite as food delivery startups like Swiggy, Tiny Owl and Food Panda have raised their commissions very high, reports Economic Times.

Foodpanda India CEOSaurabh Kochhar said about the commission, "depends on multiple factors like services we offer, the level of marketing support and average basket size".

As more number of restaurants join with Swiggy, Tiny Owl and Food Panda, the latter can afford to raise their rates. It can also be scramble for funds from the end of food startups.

Swiggy and TinyOwl are raising funds mostly to convince investors that they have changed track and are heading for a sustainable business.

The food startups has also put a halt in offering discounts and offers in order to retain customer base.

As 2015 maintained a state of constancy for all these food startups, hence, investors have lost interest in them. Investors consider infusion of capital in these as deputation or cost economics business keeping par with their pace of consumer acquisition.

The condition will apply if restaurants are "willing to pay for food deliveries, and if yes, how much, and will this cover business costs", said a hedge fund investor with the condition of anonymity.

Swiggy, presently India’s largest food delivery chain claims its commission rate as 25 percent. Nandan Reddy, cofounder of Swiggy said, Depending on the business generated, we negotiate our service fees with listed restaurants every three to six months." Swiggy delivers upto 20,000 ordered per day on average. The investor list includes Accel Partners and Norwest Venture Partners.

A Bengaluru restaurant chain associated with both Swiggy and TinyOwl considers the commission rise of no benefit as the online orders are still few in number. A top executive of the restaurant who didnt want to be quoted said, "We get about 10 percent of our orders from online platforms. The raised commissions don't matter much as for us it is more about being discovered by a whole new customer base." CEO of Mumbai based TinyOwl, Harsh Vardhan said that the company now levies its own delivery costs on the restaurants.

The official spokesperson from food delivery pioneer, Zomato said that it lets restaurants decide upon the delivery cost and transfer cost to customers. Initially Zomato charged 25 percent commission in case of premium restaurants.

Akhilesh Bali, chief executive of LimeTray said, "Last year was about market creation, acquiring customers and merchants. In 2016, (we) have to prove that this is a real sustainable business."

Other delivery startups like Roadrunnr, Opinio and Shadowfax are also boasting their delivery prices to 50/consignment which used to be 20 beforehand.

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