Business Today

Restaurants vs Online food: The battle over discounts continues

The issue blew up on August 14 when restaurants across major cities started the #logout campaign in protest to deep-discounting that some platforms were providing users. Restaurants felt deep-discounting was hurting the core value proposition of the restaurant business and undermining its value

Rukmini Rao        Last Updated: August 20, 2019  | 21:20 IST
Restaurants vs Online food: The battle over discounts continues

The latest war in brick and mortar v/s online space to hit the food and beverage industry is not likely to end any time soon. The National Restaurant Association of India (NRAI) which represents over 500,000 restaurants held discussions over the past two days with five online food platforms. Following the meeting, NRAI said aggregators had agreed to rejig features which will allow the restaurant-customer ecosystem to detox from deep-discounts that have crippled the industry. However there is no clarity on what this could mean and what changes are likely to be incorporated. Rahul Singh, President, NRAI said "We discussed our concerns with them and now they will take some time to rejig their products and come back with revised features which obviates deep discounting".

The issue blew up on August 14 when restaurants across major cities started the #logout campaign in protest to deep-discounting that some platforms were providing users. Restaurants felt deep-discounting was hurting the core value proposition of the restaurant business and undermining its value. Close to 2,000 restaurants across the NCR, Bengaluru, Mumbai, Kolkata decided to opt out of apps such as Zomato, Easydiner, Dineout, Gourmet Passport and Magicpin which provide discounts, offers and coupons.

Following the meeting, NRAI said it was bemused to learn that aggregators were promoting deep-discounts to stay competitive and relevant. What hurt the most was that deep-discounts were funded by the restaurant industry and not aggregators. Moreover, as opposed to general perception, restaurants did not get any share of the proceeds aggregators generate from guests as subscription fees. Singh said "The idea of scoring a discount should make guests feel special and not give them a sense of beating the system. Discount is a privilege and not a right". Unlike retail, where end of season sale is to clear leftovers, a restaurant doesn't serve leftovers at a discounted price. It's all prepared fresh and made to order" he added.

Zomato's founder and CEO Deepinder Goyal tweeted "We are committed to work with industry and make modifications to Zomato Gold which will result in a win-win for restaurants and consumers." He urged restaurant owners to stop the logout campaign and discuss a way forward. The reason why the start-up industry doesn't want to miss out an opportunity and iron out differences with restaurant owners is because of the sheer size. According to a study by Market Research Future, India's online food ordering market is likely to grow at over 16 per cent annually to USD 17.02 billion by 2023, The study, 'Digital Platforms Reign in the Food Ordering Market', said growth in online food ordering has been attributed to the rising number of working women in most metro cities."

According to the study, 95 per cent of respondents surveyed order food online, owing to promotional offers and discounts. The All India Online Vendors Association are battling problems with Amazon and Flipkart, taking a cue from what restaurant owners have done. Meanwhile, Ashwani Mahajan, National Co- convenor, Swadeshi Jagran Manch tweeted "We call upon all publishers, manufacturers, consumer goods companies, dairy producers like Amul to boycott these so called aggregators who are deep discounting platforms like Amazon, Flipkart-Walmart, the same way as restaurants have done, and teach them a lesson".

Also Read: Auto sector slowdown: Tata Motors, Maruti Suzuki, Mahindra stocks fall up to 55% in one year

Also Read: INX Media case: CBI officials at P Chidambaram's house after Delhi HC dismisses anticipatory bail plea

Also Read: As slowdown bites, real estate industry wants a 'stress fund' to help unfinished projects

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close