Programs

Nrai Issues Restaurant Advisory on Swiggy and Zomato Restoration Programs

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Swiggy made a foray into the restaurant segment after its recent acquisition of Dineout, while Zomato has been in the space with its previous programs like Zomato Gold & Pro which allowed consumers to take advantage of offers while dining in restaurants.

As food ordering platforms Swiggy and Zomato pilot restaurant projects that offer discounts and allow customers to pay bills through their apps, the National Restaurant Association of India (NRAI) has issued a notice to partner restaurants assessing its members on the ‘nuances’ of the programs and their potential impact on the restoration ecosystem.

Swiggy made a foray into the restaurant segment after its recent acquisition of Dineout, while Zomato has been in the space with its previous programs like Zomato Gold & Pro which allowed consumers to take advantage of offers while dining in restaurants. Zomato is now rolling out Zomato Pay which allows its restaurant partners to “extend a discount to customers paying the bill value through Zomato Pay.”

In its advisory, the NRAI said restaurants should fully understand these programs, “carefully inspect the terms and conditions, and then make an informed decision about whether to participate in these programs.”

“It’s a big deal as both have hit new heights in terms of how much they can charge for delivery orders (currently in the 25-30% range) – making efforts to widen the pie, the only way forward,” he added.

According to the NRAI, Swiggy Diner and Zomato Pay basically operate on the same build where there is no cost or subscription fee for the customer to participate, while restaurants are required to offer a discount (in the range of 15 40%) to join. from the program. Restaurants will also have to pay a commission on each transaction made through the delivery platform’s payment gateway.

“It also opens Zomato & Swiggy the sacred possibility of earning commission on restaurant transactions. So far, the only commission per transaction that Zomato/Swiggy is able to earn is for home delivery transactions made on its platform,” the NRAI said in the notice.

The NRAI’s argument is that if this program offers customers significant discounts and cashback, it will make on-site dining much cheaper.

This, because the discounts of 15-40% will be entirely borne by the restaurants and it will also imply a commission of 4-12%. Other payment gateways charge between 1% and 1.5% on these transactions.

Additionally, NRAI believes these programs will also allow intermediaries to obtain restaurant data, at a time when it claims restaurants are being denied ownership of critical delivery customer data.

“As more and more people change their payment habits in favor of discounts and cashback, their terms of engagement with the restaurant will change unilaterally and irreversibly, as will their behavior in the delivery market by “Your” customers will eventually become firmly “their” customers,” the NRAI wrote.

“The fundamental question here is why should a restaurant pay a commission to an intermediary to offer a discount to its own customer? The NRAI urges its members and the wider restaurant fraternity to speak to your industry colleagues , to ask your touchpoints on these platforms what tangible value it brings to your business, and to exercise caution as well as good judgment before choosing to be part of these programs. as restaurateurs will have a long-term impact on the economy of the entire sector, we hope your final choice will reflect this,” the NRAI told its restaurateur partners.

This is not the first time that the association and the restaurants on site have opposed the policies of Swiggy and Zomato. In 2019, the NRAI and the Federation of Hotel and Restaurant Associations of India (FHRAI) launched a “#Logout” campaign encouraging consumers to log out of Zomato and work towards implementing drop shipping.

In 2021, the NRAI also filed a complaint with the Competition Commission of India (CCI) to request an investigation into the alleged anti-competitive practices of Swiggy and Zomato. Following this, CCI launched an investigation into the allegation and said it would investigate the restaurants’ customer data hiding practices, exclusivity clauses, the launch of private label and preferential agreements with certain restaurants. partners.