Zomato responds to restaurants allegation, calls discounts only user engagement mechanism

By: | Published: February 12, 2019 8:50 PM

Zomato said that the company is "discussing the matter with the involved restaurant partners to achieve an amicable solution".

Over 500 restaurants had reportedly sent a petition to CCI and PMO against foodtech companies ‘misuse’ of their dominant market positions.

Food ordering company Zomato, in response to the restaurants’ allegations of providing deep discounting to customers, has said that discounts are merely a mechanism to encourage user participation and all our restaurant partners can choose to participate in a discounting campaign.

Earlier last month more than 500 small and mid-size restaurants had reportedly sent a petition to the Competition Commission of India (CCI) and the Prime Minister’s Office (PMO)

The petition said that such platforms have been engaged in deep discounting, in-house kitchens and internal sourcing through the dominant market position they hold to “wipe out small and medium enterprises,” the petition said.

Zomato, however, claimed to be engaging with restaurants for a way out. “We are discussing the matter with the involved restaurant partners to achieve an amicable solution, which would benefit all the parties in the ecosystem,” said a company spokesperson in a statement.

“In the last 12 months alone, not only have we doubled the number of restaurant partners on the platform to over 55K, but our partners have seen a two-fold increase in Swiggy’s contribution to their business.,” Swiggy’s spokesperson had said last month in response to the petition.

“Unlike retail, FDI restrictions are not applied on the restaurant sector or food service aggregators” Rahul Singh, president at National Restaurant Association of India (NRAI) had said last month in a statement.

Zomato has over 80,000 restaurants, of which a ‘significant majority’ are small and mid-size restaurants with a presence in 150 cities in India.

The issue of deep discounting came took centre stage in December last year when the Group for Restaurateurs’ Empowerment, Advancement, and Togetherness (GREAT), an independent group of restaurateurs in Bengaluru, wrote an open letter on the blog website Medium.com. highlighting their plight.

“We may find it hard to do business with you (food aggregators). And in the coming days, you may just see us drop off your list of partners. Or our restaurants showing closed/offline on each of your platforms,” the letter said.

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