'It's Hurting Our Business: Over 2,000 Restaurants 'Log Out' Of Zomato Criticise Deep Discounts

Challenging deep discounting practices, over 2,000 restaurants, led by the National Restaurant Association of India (NRAI), are logging out of platforms including EazyDiner (Prime), Zomato Gold, Dineout, Nearbuy and Magicpin under the #Logout campaign. From 1,200 restaurants across the country’s major cities, the number has now gone up to around 2,200 restaurants.

The restaurateurs claim that their business is being hurt by programmes such as Zomato Gold, Infinity Dining and offers from other players.

“NRAI has come together to detox consumers from discount addiction. The move is being undertaken to protest against aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing. Restaurateurs, it’s time to #Logout.#CozWeDeserve,” NRAI tweeted.

NRAI has come together to detox consumers from discount addiction.
The move is being undertaken to protest against aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing.
Restaurateurs, it’s time to #Logout.#CozWeDeserve pic.twitter.com/bI8XUQ4MtX

— NRAI (@NRAI_India) August 14, 2019

In 2017, Zomato launched Gold, allowing people who signed up to get 1+1 on food and 2+2 on drinks from partner restaurants. In July 2019, it launched ‘Infinity Dining’ under which anything can be ordered from the entire menu with unlimited servings at a fixed cost.

Dineout, on the other hand, offers Gourmet Passport, a membership programme that gives one a buy-one-get-one on buffets, food and drinks at more than 800 restaurants across India.

Clearly, these platforms offer great deals to customers and save a lot of their money. Among others, entrepreneur Animesh Lodha tweeted:

More than 500 restaurants have served notice to go off #zomatogold. Perpetual discounting has only killed the business model & the entire Industry is feeling the pain. Restaurants are completely cornered & at times also sell in losses. It needs to stop & it will be stopped.

— Animesh Lodha (@animeshlodha) August 16, 2019

What Are Restaurants Saying?

“As per Zomato Gold rules, we are bound to provide huge discounts to our customers,” says Priyadosh, general manager of a Bengaluru-based restaurant called ShakesBierre, in a conversation with The Logical Indian. “I think it should depend more on a restaurant’s food, ambience and service to attract customers and not discounts. These huge discounts are only hurting our business. I believe we have the power to make customers happy without providing them with discounts,” he adds.

Zomato Gold’s discounts do not provide any monetary benefit to the restaurants. In fact, it adds to their costs. Restaurants have to pay a regular commission, and also a sign-up fee. In addition to these, massive discounts only hurt the business.

“We want to build a warm, happy relationship with our customers. We do not want them to come to our restaurant just because of the discount,” says Aveen Aiyappa, the manager of the popular Bengaluru-based restaurant whose name he wishes to keep anonymous.

“It hurts the business, and that is why so many restaurants are logging off these apps. But apart from the business, it is sad that we no longer have customers who come because they feel connected to the place and smiles of those who serve them. Good food, good mocktails hardly matter anymore. Only discounts matter. Once these discounts are stopped being offered, are we even going to have people coming to our place?” he says.

What is Zomato’s Deepinder Goyal Saying?

Zomato founder and chief executive Deepinder Goyal put out a series of tweets, finally urging restaurant owners to stop the campaign.

“Our thoughts on the restaurant industry’s stand against deep discounting – 1 – Zomato Gold has been a major hit, but we understand that bargain hunters have also joined Zomato Gold and they are hurting some segments of the restaurant industry very badly,” he wrote.

Our thoughts on the restaurant industry’s stand against deep discounting –⁰

1 – Zomato Gold has been a major hit, but we understand that bargain hunters have also joined Zomato Gold and they are hurting some segments of the restaurant industry very badly.

— Deepinder Goyal (@deepigoyal) August 17, 2019

“2 – I am sad that young entrepreneurs (much like me) in the restaurant industry are feeling the pressure to such an extent that they had to launch such a campaign. We set out to create a company which can create a massive impact on consumers, as well as business owners,” he added.

2 – I am sad that young entrepreneurs (much like me) in the restaurant industry are feeling the pressure to such an extent that they had to launch such a campaign. We set out to create a company which can create a massive impact on consumers, as well as business owners.

— Deepinder Goyal (@deepigoyal) August 17, 2019

“3 – 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,” he further wrote.

3 – Somewhere, we have made mistakes and things haven’t gone as planned.⁰ This is a wake up call that we need to do 100x more for our restaurant partners than we have done before.

— Deepinder Goyal (@deepigoyal) August 17, 2019

4 – We are committed to work with the industry and make modifications to Zomato Gold which will result in a win win situation for restaurants and consumers. Just like last year, when we changed some rules around Gold after hearing about the concerns of the restaurant community⁰.

— Deepinder Goyal (@deepigoyal) August 17, 2019

“5 – 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,” he wrote.

5 – 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.

— Deepinder Goyal (@deepigoyal) August 17, 2019

6 – I would also want to urge the restaurant industry to proactively look for ways to reduce operating costs, so that eating out becomes more affordable for consumers – our only objective here is to drive the growth of the restaurant industry.

— Deepinder Goyal (@deepigoyal) August 17, 2019

7 – Take a look at this data – the avg price of a delivery order in India is just about the same as that of China. However, per capita income in China is 4.5x as that of India. It's important we bring down prices to find sustainable growth in the food sector in our country.

— Deepinder Goyal (@deepigoyal) August 17, 2019

8 – What's good for restaurants is good for Zomato. What's good for consumers is good for Zomato. Finding the right balance and product market fit is the restaurant industry's problem (and that includes us).

— Deepinder Goyal (@deepigoyal) August 17, 2019

On August 19 and 20, representatives from these dining platforms met top NRAI members to resolve the issue. “It is decided that all aggregators will rejig their features that will allow the restaurant-customer ecosystem to detox from the addiction of deep-discounts that has crippled the industry,” NRAI president Rahul Singh said in a statement. However, what changes will be made to such platforms and their apps are yet to be seen.

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