Zomato, Swiggy, Uber Eats, Food Panda get letters from NRAI to do away with deep discounts

  • Over the last 11 days, restaurants across the country led by the NRAI carried out the '#logout' campaign

  • The '#logout' campaign was against deep discounts provided by food service aggregators

  • The Association reiterated its stand that these discounts are mostly funded by restaurant operators and sometimes under 'coercion'

The National Restaurant Association of India (NRAI) has asked delivery platforms to do away with deep discounts. The industry body has sent letters to all the four major online aggregators-- Swiggy, Zomato, Uber Eats and Food Panda—on Monday asking them to resolve the serious concerns raised by the large standalone and chain restaurants, smaller players operating in micro-markets across India and the fast-growing cloud kitchen entities.

The Association said that it was concerned with the lack of transparency, deep discounting and abuse of dominant position by the online delivery aggregators and this was causing serious concerns for the nascent aggregator-driven delivery industry. This is especially impacting the growth, employment and sustainability of the thousands of small restaurants and start-ups in the country, it said.

Anurag Katriar, Head of NRAI Mumbai Chapter said in the letter, “there is a very strong demand to immediately extend the #Logout movement to the online delivery vertical as well.”
NRAI also highlighted complaints about discounts being offered in the delivery segment throughout the year. "Discounts are a privilege and are extended on occasions. However, in the current environment, deep discounts, ranging from 30-70 percent, are being deployed 365 days of delivery platforms."

“This distorts the market and hinders the profitable growth of the sector. These discounts are not sustainable nor are they beneficial to the industry at large," the letter said.

The Association reiterated its stand that these discounts are mostly funded by restaurant operators and sometimes under "veiled coercion". The letter also spoke of uneven commission charges. It said these charges are predatory and delivery service providers revised the charges unilaterally.

 Zomato, Swiggy, Uber Eats, Food Panda get letters from NRAI to do away with deep discounts

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"These commissions or charges are not standard by any nature, rather they are exploitative and bereft of rationale. We request you to create a transparent system of commission or charges based on certain logical metrics such as AOV (Average Order Value), Volume of Business etc," NRAI said in a letter.

The Association also noted that the aggregators do not share customer data with restaurants despite repeated requests and also sought assurances that the data would not be monetised.

It further observed that "big delivery aggregators are using the sales and customer data to develop their own brands, their own kitchens and diverting traffic thereby creating a grossly unfair playing field with other restaurants." NRAI described this behaviour as a conflict of interest on the part of the aggregators.

Katriar reiterated, “we are not against the technology platforms, but our concerns are largely around these aggregators misusing their dominant position to indulge in predatory behaviour; commercially and in forming the terms of engagement."

Over the last 11 days, restaurants across the country led by the NRAI carried out the '#logout' campaign against deep discounts provided by foodservice aggregators (FSAs) in dine-in services, and a lot of the restaurants have logged out of the services of the aggregators, according to media reports.

NRAI has struck a deal with Dineout, Eazydiner, Nearbuy and Magicpin to make favourable changes to their model and charges, as the four have agreed to rejig their products to do away with deep discounting. Zomato, which provides the Zomato Gold platform for dine-in services has stopped engagement with NRAI on after it had made some changes which did not go down well with the restaurants Association.

Updated Date: Aug 27, 2019 11:10:16 IST