Online food platforms to redesign schemes to check deep discounts, says NRAI

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Published: August 21, 2019 5:27:46 AM

The decision was reached following a two-day meeting NRAI had with food aggregators, restaurant reservation and discounted membership platforms- Zomato, EazyDiner, Dineout, Magicpin, Nearbuy.com and Gourmet Passport. 

zomato, swiggy, uber eats, nline food platform, NRAI, industry news, food delivery, zomato discount, swiggy discountLast week, over 1,000 restaurants across cities delisted themselves from dine-in programmes offered by the platforms as part of ‘logout’ campaign.

The National Restaurant Association of India (NRAI) on Tuesday said that online restaurant aggregators have decided to ‘rejig’ their discounting and promotional features. Restaurant bodies have long maintained that deep discounting by online platforms have been eating into their profits and hurting their businesses.

The decision was reached following a two-day meeting NRAI had with food aggregators, restaurant reservation and discounted membership platforms- Zomato, EazyDiner, Dineout, Magicpin, Nearbuy.com and Gourmet Passport. “These deep-discounts are funded by restaurant industry and not the aggregators. Moreover, as opposed to general perception, restaurants do not get any share of the proceeds that aggregators generate from guests as subscription fees,” said Rahul Singh, president of NRAI, in a statement.

Last week, over 1,000 restaurants across cities delisted themselves from dine-in programmes offered by the platforms as part of ‘logout’ campaign. “The idea of scoring a discount should make guests feel special and not give them a sense of beating the system. Discount is a privilege and not a right,” Singh said.

Dining and tech platform Dineout had stated: “We do not believe in the concept of deep discounting and have always adhered to a “sustainable discounts model” which is aimed at attracting more diners to our restaurant partners without affecting their margins. In a recent meeting, the NRAI has also recognised the level of customisability Dineout offers its restaurant partners in order to support their business.”

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Singh said that discounting works in the retail space as brands can limit supply thereby creating a sense of urgency in the eyes of the consumer. “Unlike retail, where end-of-season sale is to clear leftovers, a restaurant doesn’t serve leftovers at a discounted price. It’s all prepared fresh and made to order,” Singh added.

In a separate statement, Federation of Hotel & Restaurant Associations of India (FHRAI) said that it had written to the top leadership of food service aggregators, outlining a list of issues that needs to be worked out between its restaurant partners and the aggregators. FHRAI has listed six issues for consultation which includes profitability and ‘unfair customer appeasement practices’, among others.

“While FSAs are floating offers and discounts to lure customers, it is coming at a cost to the restaurants. Restaurants may be able to sustain such discounting only for so much time because an enterprise has overheads and operating costs. If a restaurant withdraws from discounting, the FSAs app immediately downgrades it and favours another restaurant which may still be in a position to discount. This is just not fair,” said Pradip Shetty, honorary joint secretary at FHRAI.

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