Restaurants versus foodservice aggregators: Will the logout campaign intensify further?

Restaurants versus foodservice aggregators: Will the logout campaign intensify further?

Despite repeated discussions between restaurants and foodservice aggregators over the last two months, they are yet to find a middle ground on deep discounting. “Zomato Gold is a poster boy of deep discounting,” says Anurag Katriar, President, National Restaurant Association of India.

The logout campaign which began in August 2019, saw a full-blown war in the food space. Thousands of restaurants delisted from these loyalty programs owing to unreasonable discounts & commissions sought by foodservice aggregators. Restaurants said that Zomato Gold, Infinity Dining and offers from other foodservice aggregators was hurting their business. Most of these offers were only in the dine-in space.

In a bid to uphold the interest of members, The National Restaurants Association of India tweeted in August, “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”

Restaurants claimed that these discounts devalued their offerings and consumers had become “bargain hunters.”

A series of meetings were held between restaurants and aggregators to find a middle ground. Restaurants claim that while some foodservice aggregators toned down the level of discounts offered, Zomato stood isolated. But it did make some modifications to the Gold program. Key changes that Zomato made included restricting the use of the Gold membership to one unlock per day and capping the number of Gold unlocks per table. Essentially, restricting it to two unlocks per table.

On August 22, Zomato founder Deepinder Goyal tweeted, “Zomato is logging out of the logout campaign. We have said enough, and we are getting back to work. I am confident better business sense will prevail at the end.”

Zomato, which gets around 10 percent of its revenue from its subscription service Zomato Gold had been looking to expand this service further. Soon after, Zomato decided to launch Gold membership plan for food delivery. This was along similar lines of the contentious Gold dine-in program.

And this move hasn’t gone well with restaurants. “Zomato Gold comes as a roadblock because benefits are extended to delivery. Offers on delivery are a desperate attempt by Zomato to keep ‘Gold’ going,” said Katriar.

On the back of this, restaurant associations have put out a charter of demands to aggregators on delivery. They say that they would prefer having a dialogue with aggregators before ‘logging out of delivery.’ Restaurant associations like the NRAI and the HRAWI are likely to have some more meetings with aggregators to discuss high commissions and penalties, unreasonable charges, bringing of private labels, unreasonable rules of engagement and threats of dropping rating of restaurants.

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Author: Eric