AP Hotels Association Boycotts Swiggy Services
AP Hotels Association to Boycott Swiggy from October 14
The Andhra Pradesh Hotels Association (APHA) has announced a statewide boycott of Swiggy operations starting on October 14, 2024. The decision, according to APHA President RV Swamy, stems from Swiggy’s failure to make timely payments to restaurants and food outlets associated with the platform.
Reasons for the Boycott
The primary reason behind the boycott is Swiggy’s delay in processing payments to restaurants and other food establishments. APHA President RV Swamy and Committee Convenor Ramana Rao emphasized that the association had engaged in multiple discussions with Swiggy to address these concerns. However, despite efforts to resolve the issue, Swiggy failed to meet the demands set by the association.
Zomato Agrees, Swiggy Doesn’t
The Andhra Pradesh Hotels Association had also approached Zomato, Swiggy’s competitor, with similar concerns regarding payment delays and other operational issues. Zomato, however, responded positively and agreed to the terms and conditions laid out by the association. In contrast, Swiggy refused to accept the proposed conditions, which ultimately led to the decision to boycott Swiggy’s services.
The association’s leadership highlighted that the failure to reach an agreement with Swiggy was not taken lightly. After much deliberation, the APHA decided that ceasing operations with Swiggy was the best course of action to protect the interests of restaurant owners across the state. The boycott will impact numerous hotels and food outlets that currently depend on Swiggy’s platform for a significant portion of their business.
Swiggy’s Financial Struggles Ahead of IPO
Swiggy’s financial health has been a topic of concern, especially as the company gears up for its Initial Public Offering (IPO). According to reports, Swiggy incurred a net loss of ₹2,350 crore in the fiscal year 2024 (FY24). While this is a significant loss, it represents an improvement from the previous year, when Swiggy’s losses amounted to ₹4,179 crore in FY23.
The company managed to reduce its net loss by 44%, largely due to better financial management and a focus on its grocery delivery service, Instamart. Revenue for the company grew by 36% during the same period, reaching ₹11,247 crore in FY24, compared to ₹8,265 crore in FY23. Swiggy’s gross order value (GOV), which refers to the total value of orders processed through its platform, grew to $4.2 billion, representing a 26% year-on-year increase.
Improved Profitability but Challenges Remain
Despite the reduction in losses, Swiggy still faces challenges ahead of its IPO. While the company’s revenue has grown and its losses have decreased, its ability to become fully profitable remains uncertain. The company’s financial report for FY24 emphasized that much of the improvement was due to the maturation of Instamart, which had previously required significant investment.
Swiggy’s monthly transacting users (MTUs) also saw a rise, reaching approximately 14.3 million during FY24. However, the platform still struggles with achieving profitability across all its services, especially in the highly competitive food delivery market. The ongoing boycott by the Andhra Pradesh Hotels Association could further complicate Swiggy’s road to profitability, as the platform risks losing a substantial portion of its business in the state.
Implications of the Boycott
The boycott is expected to have significant consequences for Swiggy’s operations in Andhra Pradesh. Hotels and food outlets across the state that rely on Swiggy for delivery orders may see a temporary dip in business, but the association is confident that other platforms like Zomato will be able to fill the gap.
For Swiggy, this move could lead to further financial strain, especially as the company is preparing for its IPO. Investors may view the boycott as a red flag, adding to the existing challenges of reducing losses and ensuring long-term profitability.
In the meantime, the Andhra Pradesh Hotels Association has stated that it remains open to future discussions with Swiggy, provided the company is willing to meet the terms agreed upon by the association. Until then, the boycott will remain in effect.
Disclaimer: This article is for informational purposes only and is based on publicly available information. The author does not endorse any specific action or company mentioned herein.