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After tweet from Zomato’s Goyal, NRAI says it’s united to end deep discounting

Over a thousand restaurants have delisted from Zomato, EazyDiner, Nearbuy, Magicpin and Dineout under a #Logout campaign over the issue of unsustainable deep discounting.

, ET Bureau|
Updated: Aug 19, 2019, 03.14 PM IST
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food delivery - getty
Unlike marketplaces like Amazon and Flipkart where they bear the discounts, restaurants have to pay for all the discounts as well as the freebies. The entire discounting and freebies have to be borne by the restaurants.
NEW DELHI: Large restaurant companies said on Monday they are united to end deep discounting and will be meeting online food aggregators over the next two days to address the issue, two days after online delivery and dine-in aggregator Zomato founder Deepinder Goyal tweeted that restaurant owners should stop the Logout campaign.

“We continue to stand united on ending the epidemic of deep discounting, once for all,” National Restaurant Association of India (NRAI) president Rahul Singh said. “Over the course of next two days, meetings have been aligned with all five aggregators. These will be attended by the founders of these companies and the NRAI's national management committee members which represent all formats of the restaurant sector,” Singh said.

Goyal had said in a series of tweets late Saturday night: “In the interest of consumers, we request restaurant owners, to stop the logout campaign, and have a collaborative discussion with internet aggregators for finding a sustainable way forward.”

Over the past week, over a thousand restaurants have delisted from the dine-in platforms of Zomato, EazyDiner, Nearbuy, Magicpin and Dineout under a #Logout campaign over the issue of what they say is unsustainable deep discounting. The campaign is being led by the NRAI, which has close to five lakh members.

Lite Bite Foods director Rohit Aggarwal said: “We are currently completely logged out. There are meetings scheduled after which we will have more clarity.” Lite Bite Foods operates Punjab Grill, Zambar and Asia 7. “Deep discounting does not build loyalty. We find that a certain portion of consumers gravitates towards restaurants offering the highest discounts irrespective of the quality of experience,” Aggarwal said.

Last Thursday, 300 prominent restaurant brands in Gurgaon delisted themselves from aggregators and table reservation services’ dine-in programmes of Zomato, EazyDiner, Nearbuy, MagicPin and GourmetPassport, citing unsustainable” deep discounting. This was followed by restaurants across India joining in the Logout movement, citing that increasing rentals, denial of input tax credit and anytime, anywhere, any day discounting behaviour by aggregators was severely denting profitability.

Goyal had also tweeted about restaurant companies reducing costs. “I would also want to urge the restaurant industry to proactively look for ways to reduce operating costs, so that eating out becomes more affordable for consumers - our only objective here is to drive the growth of the restaurant industry,” his tweet said.

Reacting to Goyal’s tweet, Priyank Sukhija, CEO of First Fiddle Restaurants, which operates Lord of the Drinks and Warehouse Cafe tweeted: “We are starting with cutting down budgets for online advertising on aggregating platforms.”

In his tweets, Goyal also said Zomato is “committed to work with the industry” and make modifications to Zomato Gold. “Just like last year, when we changed some rules around Gold after hearing about the concerns of the restaurant community,” the tweet adds.

Under its Infinity Dining programme launched in July, Zomato is offering its Gold members unlimited meals at restaurants for a fixed price, via the app. Restaurants have said that the loyalty programmes dent profitability, but they are compelled to participate because of competition and fear of missing out as others are offering discounts as high as 50%.

“What's good for restaurants is good for Zomato. What's good for consumers is good for Zomato. Finding the right balance and product market fit is the restaurant industry's problem (and that includes us),” said another of Goyal's tweets.

Restaurant companies have been in direct confrontation with the aggregators over deep discounting, cloud kitchens and data masking in the past as well. NRAI’s Singh said last week that restaurants were compelled to Logout because it was hampering the basic structure of the trade. "This was the unanimous desire of all across the country. Our past discussions with Zomato on other issues largely remained unresolved as it would largely circle around discounting to acquire customers,” he said.

“I am sad that young entrepreneurs (much like me) in the restaurant industry are feeling the pressure to such an extent that they had to launch such a campaign. We set out to create a company which can create a massive impact on consumers, as well as business owners. Somewhere, we have made mistakes and things haven’t gone as planned,” Goyal’s tweet said. He said while Zomato Gold has been a major hit, bargain hunters have also joined Zomato Gold which are hurting some segments of the restaurant industry very badly.

Unlike marketplaces like Amazon and Flipkart where they bear the discounts, restaurants have to pay for all the discounts as well as the freebies. The entire discounting and freebies have to be borne by the restaurants.

In January, restaurants companies had asked the government to clarify whether online food-ordering is covered by the policy on foreign direct investment (FDI) in e-commerce. Areas of dispute such as deep discounting, inventory control, data masking and private labels have remained unresolved.

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