According to Zomato, in damage-control mode after 1,200 of its partner restaurants quit, the problem was caused by ‘bargain hunters’; Goyal has assured action and has asked restaurants to stop the #logout movement.
With another body of restaurants joining the fight with food aggregator Zomato, the battle is well and truly joined and, going by the tweets of the firm’s founder, Deepinder Goyal, it would appear Zomato will renegotiate. The fight centres around Zomato Gold, a subscription service that offers massive discounts on dining; those signing up at a price of Rs 1,199would get, for instance, either one-plus-one on food, or two-plus-two on drinks at partner restaurants. According to Zomato, in damage-control mode after 1,200 of its partner restaurants quit, the problem was caused by ‘bargain hunters’; Goyal has assured action and has asked restaurants to stop the #logout movement.
The furore started after Zomato launched Infinity Dining—all-you-can-eat deals for Rs 750 per person; it is still not clear what the restaurants were expecting. They signed up for services to increase footfall, so how didn’t they anticipate the deep discounting? When the entire model of e-tail and food delivery is based on discounting—whether this is healthy or not is a different matter—how did they believe this wouldn’t apply to them? Zomato can either reduce its discounts or put in a fair-usage policy, like mobile phone companies have, but this could also result in it losing customers. Both Zomato as well as the restaurants are learning their lesson the hard way. Zomato could afford the discounting because it had VC money; the restaurants, however, didn’t have this luxury, so they couldn’t sustain the discounting for too long. With no one refusing a free lunch, the problem is that someone has to pay for it. Eventually.