To detox consumers from discount addiction, 300 eateries to opt out of aggregator menu
300 prominent restaurant brands are logging out of aggregators such as Zomato, EazyDiner, Nearbuy.
“Restaurants have already suffered due to increasing rentals, and denial of input tax credit. The situation is now aggravated through the anytime, anywhere, any-day discounting behaviour by aggregators,” said National Restaurant Association of India (NRAI) president Rahul Singh. “So now restaurants have come together to detox consumers from discount addiction.”
The restaurant companies plan to issue a customer advisory to this effect.
“We are here to provide you a wholesome experience through a sustainable business environment,” it will read, according to the text that ET has seen. “Zomato Gold, EazyDiner, MagicPin, Nearbuy, etc are resorting to unjust practices and hurting our business. We have no option but to #LogOut as a mark of our protest.” Delhi, Pune, Mumbai, Kolkata and Bengaluru will be next, Singh said. NRAI represents 500,000 restaurants across the country.
Under its Infinity Dining programme launched in July, Zomato Gold members can order 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.
“We were being arm-twisted enough — it was high time we took such a step. We can’t offer such unsustainable discounting to consumers, it disrupts our entire books,” said Priyank Sukhija, CEO of First Fiddle Restaurants.
‘Restaurants have to Bear Discounts’
First Fiddle operates Lord of the Drinks and Warehouse Cafe. Sukhija said other restaurants in other cities will join in 10 days. “We have held multiple meetings with aggregators like Zomato on their Gold offering on the discounting issue — unsuccessfully.”
Gurgaon, with its metropolitan customer base, is one of the country’s largest dining-out markets with the highest density of microbreweries.
“Discounting as much as 50% leads to steep increases in operating costs. As it is we have been denied input tax credit. This sort of discounting also devalues the brand, and is simply unsustainable,” said Lalit Ahlawat, cofounder of Striker Hospitality and Soi Hospitality, which operates Soi 7 and Striker Skybar.
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 ecommerce and if such companies should comply with guidelines prohibiting them from influencing prices and operating inventory-based models, including their own kitchens. The NRAI had raised the issue that online food companies are making their consumers “discount addicts” and that the ambiguity needed to be resolved. Areas of dispute such as deep discounting, inventory control, data masking and private labels have remained unresolved.
“Unlike marketplaces such as 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,” Singh said.
An EazyDiner spokesperson said it works with restaurant partners and encourages people to eat out. “We allow restaurants to choose time slots and offers on those slots,” the spokesperson said. “A discount like other portals is not compulsory or needed on EazyDiner. Customers and restaurants appreciate the convenience that EazyDiner provides. Reservation services are operating as normal.”
Nearbuy cofounder Ravi Shankar said: “Some of our partner brands offer deals and discounts to attract customers to their premises, and all such deals and discounts on our platform are determined by the brands themselves. In fact, some of our highest-selling brands offer no discount on nearbuy.com. We have always worked closely with all our partners and are confident to remain the preferred win-win partner for them.”
A spokesperson for Zomato said the company does not see any impact on its Gold subscribers due to the #Logout campaign. “Most restaurant owners in these cities are in touch with us and are not planning to join this campaign. We are told that #Logout is being instigated by a few restaurant owners and is not the voice of the restaurant industry at large. For the industry, Zomato Gold has been a key business driver for the last 18 months and they don’t want to be driven by interests of a few restaurant owners,” the spokesperson said.
MagicPin didn’t respond to queries. Premium membership programme Gourmet Passport, owned by Dineout, declined to comment.
“The #LogOut will give Gurgaon freedom from aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing,” Singh said. “The discount structure, terms and conditions relayed by the food tech companies are unjust and unsustainable.”