Another blow for Zomato? After NRAI, 8,000-member strong AHAR boycotts Deepinder Goyal’s company

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Published: November 26, 2019 4:26 PM

AHAR logout comes weeks after the National Restaurant Association of India’s (NRAI) logout campaign that reportedly saw over 2,500 restaurants delist themselves against Gold’s dine-in service.

Zomato, Zomaland, Zomaland Picnic, Events, Chaitanya Mathur, food-tech, online food delivery, online food delivery firm, Dubai, Toyata, TikTokAHAR said it had asked Zomato to scrap the delivery service however there was no action on it. (Image credit: Reuters photo)

Around a month after the 8000-restaurant strong Indian Hotel and Restaurant Association (AHAR) had met Zomato officials over the latter’s discounted deliveries under its Gold membership programme claiming that restaurants would find it tough to recover their “cost of manufacture”, AHAR on Tuesday formally announced boycotting the service. “Hotel owners could hardly recover the cost of manufacture as they will get only 5 to 10 per cent out of total expenses done. However, Zomato will get 30 per cent service charges out of it,” AHAR said. The decision was announced on Thursday last week in Mumbai.

AHAR logout comes weeks after the National Restaurant Association of India’s (NRAI) logout campaign that reportedly saw over 2,500 restaurants delist themselves against Gold’s dine-in service. However, the number of restaurants for Zomato increased from around 6,100 in India on its Gold programme to around 6,300 restaurants as on October 1, 2019, apart from 10,000 restaurants participating in Gold delivery, according to its H1 FY2020 report.

The body said it had asked Zomato to scrap the delivery service however there was no action on it. “AHAR on Thursday in a meeting held with over 300 restaurants have completely boycotted the Zomato gold delivery service,” it said adding that the message has been passed to all the 8000 members and that all the members using the delivery service will shun it with immediate effect. “We have not taken any decision on the Zomato gold dining services, but we are completely against the Zomato gold delivery services,” said Santosh Shetty, President, AHAR.

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Comments from Zomato for this story will be updated as and when received.

The association also claimed lack of compliance check by Zomato as ‘many’ restaurants listed on the platform don’t have all the required licences under section 394 of Municipal Corporation of Greater Mumbai act. AHAR said that any eating house or kitchen or cafe must require 394 Licence from the Brihanmumbai Mahanagar Palika and that it had informed Zomato officials about restaurants having only FSSAI payment receipt/licence. AHAR also questioned the delivery commissions charged by Zomato saying that it is tough for restaurants to carry out business as the commission hits up to 22-25 per cent due to which they have to pass on the price burden to customers. The association had asked Zomato to restrict it to 15 per cent including GST.

Despite the scenario, Zomato claimed growth with a 225 per cent rise in its revenue from $63 million in the first half (H1) of FY18 to $205 million in H1 FY20. Zomato chief Deepinder Goyal also claimed monthly burn rate cut to 60 per cent from what it was six months back. “We achieved tremendous results in optimising our costs, without affecting new product launches or innovation,” Goyal had said. Zomato was reportedly valued at $3.6 billion by HSBC Global Research earlier this year while its rival Swiggy is valued at $3.3 billion.

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