No more deep discounts on Zomato, others; food aggregators discuss measures after restaurants’ objection

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Updated: August 20, 2019 4:30:53 PM

NRAI met Zomato and other four aggregators over the discounting issue and the logout campaign it triggered last week reportedly resulting in the delisting of more than 1,200 restaurants in various cities from these five platforms.

ZomatoFollowing the delisting of the restaurants, Zomato, which competes with Swiggy, Uber Eats, urged the restaurants for a “collaborative discussion” with them to stop delisting.

Restaurant discovery and reservation platforms such as Zomato, EazyDiner, Dineout, Magicpin, and Nearbuy will have to tweak their membership-based dining services to curb deep discounting promoted by such platforms that otherwise have been hurting businesses of restaurants, industry body National Restaurant Association of India (NRAI) said on Tuesday. NRAI met the five aggregators over the discounting issue and the logout campaign it triggered last week reportedly resulting in the delisting of more than 1,200 restaurants in various cities from these five platforms.

While both, NRAI and food tech firms agreed to the role technology play as the backbone for restaurant discovery and customer experience but guests should not be lured by devaluing the core product at a restaurant, according to NRAI. “Therefore 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,” the association said in a statement. However, the changes to be made are yet to be announced.

“When we hear back from all the aggregators on the changes/tweaks they will do, we will review if the objective of curbing deep discounting has been achieved. You can’t resolve everything in one meeting,” Rahul Singh, President, NRAI and Founder & CEO, The Beer Cafe told Financial Express Online.

Also read: Restaurants delisting a wake up call for Zomato, says CEO; urges restaurants to stop logout campaign

Following the delisting of the restaurants, Zomato, which competes with Swiggy, Uber Eats, urged the restaurants for a “collaborative discussion” with them to stop delisting even as it called this as a wake-up call for itself. “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,” Zomato’s founder and CEO Deepinder Goyal said in a series of tweets on Saturday. “Somewhere, we have made mistakes and things haven’t gone as planned. This is a wake-up call that we need to do 100x more for our restaurant partners than we have done before,” Goyal said.

Magicpin, on the other hand, said that it works at a base margin of 10 per cent and allow its partners to top-up anywhere from Rs 2,000 to Rs 20 Lakhs as per their marketing needs for the month while delivering guaranteed RoIs to them. “We are fully supportive of NRAI’s cause,” said Anshoo Sharma, Co-Founder & CEO, magicpin.

NRAI called it ‘bemusing’ that aggregators supported deep-discounts to compete amongst each other even as such discounts have to be borne by restaurants without getting “any share of the proceeds that aggregators generate from guests as subscription fees,” Singh said. For instance, Zomato offers 1+1 on food and 2+2 on drinks as part of its trial and annual pack worth Rs 299 and Rs 1,199 annually respectively. Zomato Gold is a membership or subscription-based dining out service, which has “grown almost 100 per cent in the past eight months and has over 1.25 million subscribers across nine countries including India,” the company had said last month in a statement.

The revision in such subscription-based discounted dining-out service is likely to discourage customers from seeking bargain deals that have now become integral to the e-commerce model of discount-led growth in revenue without any bottom line. “Discount is a privilege and not a right. Unlike retail, where the end of season sale is to clear leftovers, a restaurant doesn’t serve leftovers at a discounted price,” Singh added.

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