Are you a foodie who automatically pulls out their Zomato Gold while placing an order in a restaurant? Or do you look for places that have offers and deals on platforms like Zomato Gold, EazyDiner, Dineout’s Gourmet Passport, Nearbuy, MagicPin among others? Well, this might not last long. In a recent turn of events, over 1200 restaurants from across the country are logging out of these websites. This initiative, lead by the National Restaurant Association of India (NRAI) is trending on Twitter under the hashtag ‘Logout’ and aims to create a fairer environment for restaurants who sign up on these platforms. Anurag Katriar the Mumbai Chapter head of NRAI, and the head of deGustibus Hospitality – which has outlets such as D’OH and Indigo Deli under it, spoke to a news portal about the bleak profit the restaurant makes when it offers Zomato Gold to its customers. “If a customer orders a dish worth Rs500, the second dish—say for Rs400—becomes free. On a single dish, my earning margin is 70 percent which comes to Rs350. Now, I look at the earnings after serving two dishes, which comes down to Rs230. So, we serve two dishes and make less profit,” Anurag said.
According to reports, Zomato Gold had over 10,000 partner restaurants and over one million active subscribers globally till March 31st. But things have taken a turn for the worst ever since Zomato introduced “Infinity Dining” – a concept under Zomato Gold, where a customer can order anything from the entire menu with unlimited servings of the à la carte menu at a fixed cost for a fixed amount of time. “For the same price that users would spend on a typical two-course meal, they can now order anything and everything they want from the entire menu (yes, the entire menu!) with unlimited servings of their favourite dishes,” Gaurav Gupta, the Chief Operating Officer & Co-founder, Zomato, wrote in a blog post.
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However, the restaurateurs see this as yet another offer that will cause them unbearable losses, “With Infinity Dining it’s even worse. Zomato will buy some coupons in advance at a discount of around 30 percent, add a markup and sell it to its customers as an unlimited food for one-and-a-half-hours, which I have to honour largely on weekends. It will not only deplete the margins to virtually nothing, but also lead to humongous wastage of food, which is criminal,” Anurag said.
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
Apart from Zomato Gold, other platforms that offer discount codes for as little as Rs 5 have ruined the market for restaurants. The president of NRAI, Rahul Singh was quoted saying, “Discounting blindly is one of the worst things you can do, because you’re conditioning your customer into de-valuing your product, and you’re literally throwing money away by putting it back on the table from the initial and future sales with that customer.” In context to the #Logout movement, he added, “Restaurateurs have come together to detox consumers from discount addiction. It will have some withdrawal symptoms for a short term, but one has to see a healthier lifetime cycle.”
Restauranters have decided to logout of these platforms because they state that these deals are turning customers into discount addicts. While Zomato itself makes money upfront by charging the members a fee, the discounts sold to members are solely borne by the restaurants.
Riyaaz Amlani, the former president of NRAI and the CEO and MD of Impresario Entertainment with 48 restaurants like Smoke House Deli and Salt Water Café under it spoke about how this marketing strategy by Zomato focuses on the wrong things. “Restaurants want to know who their customers are, build a relationship with them and serve them better. But here it is just about discounts, not loyalty. The general sense is that they are working towards their own benefit and not towards the benefit of the restaurants,” he told a leading news agency.
After these questions and complaints came into light, the founder of Zomato, Deepinder Goyal took to Twitter and spoke about the problem.
In addition to this, the spokesperson of Zomato told a leading news website that no formal discussion has been requested by the restaurant committee, “Zomato as a platform is as much in it as the restaurants who saw merit in this solution and signed up to change consumer behaviour towards ‘eating out’. The initial response and the growth in the past 18 months is a testament to its success. It was extremely surprising for us to see a campaign of this nature being launched without the restaurant committee even calling for any discussion regarding the same.”
Ankit Mehrotra, Co-founder & CEO, Dineout, another platform that offers consumers discounted prices and free meals asked the restaurants to run these offers in a more sustainable manner. He added, “In consultation with restaurants we run promotional campaigns for short durations (and not through the year) such as the ‘Great Indian Restaurant Festival’, which gives a higher discount to the consumer but for only limited covers per restaurant per day. The restaurants are free to decide this cover limit, black-out timings and other such customisations that they might need to run their business in a more sustainable manner.”
This decision taken by restaurants to pull out from the listings is likely to be a huge blow on the industry and can take a toll on food platforms like Zomato and Dineout. The NRAI is reported to have a meeting on Monday to further discuss the decision that needs to be taken in this matter.
Featured Image: Zomato
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