Friends, if you are fond of eating food from Restaurants or other similar establishments, then you must have heard about Food Apps such as Zomato, Swiggy, Easy Diner, Dine out, Gourmet, Passport and many other similar Apps. These are generally called as food aggregators, and these aggregators generally to attract customers offer heavy discounts or many other schemes which are benefitted to customers. Their modus operandi is, they tie up with different restaurant across the city and offer heavy discount on the menu price of the concerned restaurant. When customer opens the their App and places order of a particular item from a particular restaurant, then the aggregator delivery person picks the order from the restaurant and deliver the same to the customer who has placed the order. Restaurant agrees for the discounted price offered by Aggregator, as such they save the amount spent on delivery of the product.
It so happened that to increase their customer base, the Aggregators started offering unreasonable discounts and schemes to their customers, which were not liked by Restaurateurs. The strategy of the Aggregators is they prey on the fear of Restaurateurs, making them believe that their product will not move in the market, if they do not get on the Aggregator’s platform. The Aggregators like Zomato(which is one of the biggest) force restaurants to offer unsustainable discounts to drive traffic to their App and charges both customers and the restaurant for the privilege. Where an Aggregator’s subscription could cost Rs 1200 for one year, the partner restaurant ends up bearing a 50% discount on as much 50% of its sale, but the restaurants live month to month and can not sustain loses.
So tired of being arm twisted by Food aggregators into offering loss making discounts to customers, over 1350 restaurants in the country-all under the umbrella of National Restaurant Association of India (NRAI) which has about 500,000 restaurants across India as members- have logged out of the Food Aggregators’ Apps.
The move, Restaurateurs say, has been growing from small murmurs of angst, culminating into final protest that was announced a day ahead of Independence Day. Rahul Singh, President of NRAI, who also operates 40 outlets of Beer Café across India, said that “t is almost like mass bunking in the college. We took a unanimous decision to protest against Arm twisting tactics of all food aggregators. The aggregators propelled the movement known as Fear of Missing Out (FOMO), but FOMO has become reversible, as witnessed by Log Outs. It is time to ditch FOMO and welcome Joy Of Missing Out (JOMO).
The cry of protest and dissent was started by about 300 odd restaurants in Gurgaon and within 24 hours Restaurateurs from cities like Mumbai,Kolkata, Bangalore and Delhi joined the cause. The bubble had to burst one day and it has happened. Around 600 establishment from Mumbai have joined the #logout campaign. The Restaurateurs main grouse is these Aggregators are not ready to listen and their main aim is to create their own brands and expand the base.
NRAI is no alone in this fight. Associations like Indian Hotel and Restaurants Association (AHAR) have also been battling these trade practices for some time. AHAR is also thinking of supporting NRAI. As per these associations when their members joined these Food Aggregators they were promised that by joining them the foot falls in their establishment will increase, so Restaurateurs joined them, and started offering discounts through aggregators. But as per them nothing of this sort is happening, we went on giving discounts, and the Food Aggregators are getting the orders from customers only during peak hours, when there is foot fall in our establishment. It might be OK with small establishment with very low seating, but for a big establishment it is becoming losing preposition during peak hours, when there is good foot fall. For an industry which is battling high rental costs, no input tax credit (ITC)on GST, heavy discounting has just ruined the market.
As of two days back, all the main aggregators have started approaching the NRAI, and requesting them to tackle the issue. After several days of silence even the biggest aggregator Zomato has sent a mailto restaurant partners and asked them to think how this issue can be resolved.
One owner of chain of elite restaurant across India summed up as “ Restaurants can not run business where the focus is shifting to who is offering 50% discount. In delivery most of us partnered with aggregators, as it was win win for both.”
So let us wait and watch for the next development in this issue.
Awaiting your comments/feed backs/views.
Anil Malik
Mumbai, India
19th Aug 2019