Restaurant body’s knives still out for Zomato

A standoff between restaurant owners’ body National Restaurant Association of India (NRAI) and food delivery platform Zomato over a contentious membership programme showed no signs of easing, with an eight-hour-long meeting of both parties concluding without resolving the stalemate.

Further, Zomato’s move to extend its Gold membership to online delivery has added to the impasse, with restaurants vehemently rejecting its fresh proposal.

NRAI, which met representatives of food aggregators Swiggy and Zomato to find ways to resolve the issue on Thursday, said Zomato’s stand was completely “unacceptable”.

“Zomato’s meeting began with a false note as they stated their intention to introduce Gold on the delivery vertical as well. This is an entirely unacceptable proposition,” NRAI said in a statement.

Zomato, however, sought to play it down.

In an emailed statement to ET, the Ant Financial-backed company said, “We had a detailed meeting with NRAI, where we discussed all issues faced by the industry and agreed to work towards solutions sustainable for all participants.”

“We have agreed to meet in a short time to discuss potential solutions and the way forward,” it added.

The marathon meeting was expected to thrash out ways to resolve contentious issues including commissions, online delivery, unbundling of services and cloud kitchens, people present at the meeting said.

A Rocky Start

It, however, got off to a rocky start, they said, after Zomato proposed to extend its controversial Gold initiative to online orders as well. The company was originally set to launch Gold memberships for online food orders from August 15. The product proposed including a free dish up to Rs 300 and delivery in less than 30 minutes, where one customer could use the service once in three hours.

Zomato has since delayed the launch, following the NRAI-backed #logout campaign. Under the campaign, restaurants under the NRAI umbrella and others have opposed the Gold programme, with 2,000 of the 6,000 restaurants originally listed logging out. NRAI’s stand has found backers, including dining out platform Dineout.

“Dineout acknowledges and applauds NRAI’s stance against unsustainable deep discounting practices crippling the Indian restaurant industry,” said Ankit Mehrotra, its chief executive officer.

“As India’s largest dining out platform, Dineout works jointly with the restaurateur community and seats more than 4 million diners every month, and we firmly believe that extending the 1+1 benefits into the online food delivery vertical would affect the industry inversely,” Mehrotra said.

Dineout is owned by Times Internet, which is a part of the Times Group that also publishes this paper.

FRICTION OVER COMMISSIONS

At the meeting, NRAI gave food aggregators 14 days to return with proposals on ways to reduce the ongoing friction over commissions and cloud kitchens, the people who took part said.

Delivery companies were also told not to cap commissions, “but use a sliding scale instead,” said one person who attended the meeting. “Something like, for the first 100 orders you charge 18% and then for the next 100, you charge 15%, and so on.”

Over the last few years, both Swiggy and Zomato have aggressively focused on acquiring new customers and driving customer repeats. They have managed to do that by offering services such as free delivery, and partly funding discounts. On the restaurants side, both companies have significantly increased their take (commissions) to as high as 30% from a low 5%.

Apart from commissions, NRAI also asked Swiggy and Zomato to unbundle their services. “We want them to separate listing,lead generation and order fulfilment from each other. The restaurants should pick and choose what they want to do,” the person who attended the meeting said.

Another restaurant owner, who is part of NRAI’s managing committee, said some orders turn out to be cheaper if delivered by the restaurants themselves.

‘CONSTRUCTIVE DIALOGUE’

In an emailed reply, a Swiggy spokesperson said, “We have had a constructive and collaborative dialogue today and have agreed to reconvene on all the points that were discussed.” “Our goal remains to enable a winwin for our small, medium and large restaurant partners and the food delivery ecosystem,” the spokesperson added.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/restaurant-bodys-knives-still-out-for-zomato/70921865