Food aggregators, including Zomato, to log out of deep discounts
- Since August 15, several restaurants delisted from the dine-in programmes and table reservation services by the aggregators.
- They blamed the deep discounting for hurting their business models.
- Restaurants had said that while such loyalty programmes dented profitability.
- They participated because of competition and the fear of missing out.
“It was decided that all aggregators will rejig their features, which will allow the restaurant-customer ecosystem to detox from the addiction of deep discounts that has crippled the industry,” said National Restaurant Association of India (NRAI) president Rahul Singh. “These deep discounts are funded by the restaurant industry and not the aggregators. Restaurants do not get any share of the proceeds that aggregators generate from guests as subscription fees.”
Over 1,800 NRAI member-restaurants opted out of dine-in services of these aggregators over the past six days.
Fines to be rolled back
This was after a #Logout campaign by the member-restaurants protesting what they said was unsustainable deep discounting. The campaign was led by NRAI, which has close to half a million members. According to people present at the meetings, Zomato said it would consider rejigging its Gold membership programme that allows customers to get a dish or two drinks free at participating restaurants. The Gurgaon-based aggregator may put on hold Zomato Infinity, an eat-as-much-as-you-can offer. Zomato also told restaurants it would roll back fines proposed to be levied on them for delaying acceptance of orders and missing delivery deadlines, one person said.
An email query sent to Zomato remained unanswered.
“NRAI also wants to talk to these food aggregators towards unbundling services – it wants restaurants to exercise the option to deliver orders themselves or opt for a food tech company’s delivery fleet,” the person said.
Since August 15, restaurants across Mumbai, New Delhi, Gurgaon, Bengaluru, Kolkata, Goa, Pune and Vadodara have delisted from the dine-in programmes of aggregators and table reservation services, blaming the deep discounting for hurting their business models. Restaurants had said that while such loyalty programmes dented profitability, they participated because of competition and the fear of missing out.
Trouble between the two sides escalated when Zomato sent a cease-and-desist email to restaurants asking them to serve 45 days’ notice before logging out or pay a fine. ET has seen the email. Last weekend, Zomato sent another email asking restaurants to point out specific pain points.
When the restaurants pushed back, Zomato founder Deepinder Goyal posted a series of eight tweets on August 17, promising to work with the industry to modify its Gold programme and urging restaurants to return to the platform in the interests of consumers.
He also called upon restaurants to bring down operating 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,” Goyal tweeted.
Other aggregators said they were working with restaurant companies to resolve matters. Dineout said it has followed a policy of sustainable discounts, which works for both consumers and restaurants, and that its premium Gourmet Passport offer limits redemptions to three coupons per outlet a year.
“As an industry body, NRAI had to take a stand for all aggregators. However, their major issue is around deep discounts,” said Dineout cofounder and CEO Ankit Mehrotra. “Dineout has never believed in deep discounting with its restaurantfirst approach and we allow restaurants to select discounts they want based on day of the week and time of the day.” Dineout is a part of the Times Group, which publishes The Economic Times.
An EazyDiner spokesperson said it does not have deep discounts or walk-in products that offer rebates. “Aggregators should be encouraging advance reservation and not walk-in deal mentality,” a spokesperson from EazyDiner said. “We always opposed products where the promise was a 1+1 deal, except for a special, time-bound promotion.”
Magicpin co-founder Anshoo Sharma said: “We are fully supportive of NRAI’s cause and are looking forward to working together to create sustainable impact for its members via use of technology.”
Nearbuy cofounder Ravi Shankar said the aggregator had made it clear to NRAI that it wasn’t a deep-discounting platform. “Our partners solely determine the offers that they would like to run, and we don’t charge any subscription fee from our customers or our partners,” Shankar said.