New Delhi: The ongoing stand-off between online food aggregators and the National Restaurant Association of India (NRAI), a trade body that represents more than 5 lakh restaurants in the country, over deep discounting practices is nothing but part of a larger global debate on tapping the basic psyche of a consumer: “Get more for less”.
The mere feeling that you are buying something at a bargain price is enough to persuade you to place an order. Look at Amazon, Apple, Big Bazaar or shops at any mall near you, which thrive on promotions, discounts and coupons for the consumers (riding on heavy promotional offers, especially on iPhone XR, Apple has regained top position in the premium smartphone segment in India after a very long time).
Why not then offer 1+1 on food or 2+2 on beverages, in order to woo more food junkies to top-notch restaurants and let them enjoy best of the cuisines and expensive drinks at almost half the price? The game is on as according to a recent study by business consultancy firm Market Research Future, the online food ordering market in India is likely to grow at over 16 per cent annually to touch $17.02 billion by 2023.
The findings showed that 95 per cent of the respondents surveyed order food online, owing to promotional offers and discounts, while 84 per cent said it is hassle-free and time-saving.
The problem actually began when one player started to reap the benefits of deep discounting while other left behind.
Gurugram-based Zomato has seen its “Gold” scheme skyrocketed within no time, changing the market dynamics and leaving restaurants fuming. Zomato’s Gold subscription programme has grown almost 100 per cent in the past eight months. It has partnered with over 10,000 restaurants globally to offer either 1+1 on food or 2+2 on beverages. As on March 31, the company had over 1 million active subscribers of Zomato Gold globally compared to 170k active users.
Also available in four cities outside India — Jakarta, Manila, Auckland and Beirut — Zomato Gold is expected to bring in $20-25 million in revenue by the end of this year. Buoyed by the success of ‘Gold’, the home-grown restaurant search and delivery platform recently introduced the “Infinity Dining” plan for “Gold” subscribers that allow them to have the entire a la carte menu at partner restaurants. The plan has been introduced in partnership with 350 restaurants – with at least a 3.5 rating – in Delhi, Mumbai and Bengaluru.
To the inconvenience for many, the tremendous growth aided by promotional marketing spends to acquire new users and be the first-to-market in many cities has taken Zomato on top of the online food aggregators’ list. Zomato Gold reached 12,000 partner restaurants across the world and 6,500 in India within no time. The programme turned out to be a major hit among “Gold” users who tweaked it to the maximum: hopping between places on a busy night, claiming 1+1 starters at one place, 1+1 main course at another, and 2+2 drinks at the last!
On August 13, the NRAI held a meeting with Gurgaon restaurateurs to discuss the prevailing concerns and issues regarding Food Service Aggregators (FSAs) and it was unanimously decided by 300 restaurateurs to immediately #logout from all the dine-in platforms to silently protest against deep discounting across the online aggregator platforms — Zomato, Eazydiner, Dineout, Nearbuy and magicpin.
The very next day, the NRAI announced the #logout movement to detox customers from discount addiction and give Restaurant Industry freedom from aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing. One has to understand here that the NRAI’s fight has not yet begun with food delivery platforms (which includes Swiggy, UberEats, Zomato and many more) but with aggregators or dine-in platforms only.
The last 10-15 days have seen prime-time battle between Zomato and the NRAI’s Rahul Singh who is Founder and CEO of Beer Cafe, over who will finally win this round. More than 2,500 restaurants have logged out from the 6,500 restaurants Zomato Gold is part of. Zomato CEO Deepinder Goyal has tried to pacify the NRAI with its 10-point solution but to no avail. Finally, he has also decided to log out from the #logout campaign, leaving more bad blood to spill in days to come. Despite repeated attempts, Goyal refused to speak with IANS as of now. The other big players — Eazydiner, Dineout, Nearbuy and magicpin – have fallen into the NRAI’s kitty.
“We thank Dineout, Eazydiner, magicpin and Nearbuy for rejigging their features to eradicate the deep discounting epidemic. However, Zomato has decided to cut all ties through a statement of their assertion of logging out of the logout campaign. From our end, that simply implies #ZoGoisNoGo,” says the NRAI. In bad news for Swiggy, UberEats and others, the trade body has said it will very soon initiate movement against “Online Delivery Aggregators” which are affecting the sustainability and growth of the restaurant industry. The fight over food is only going to get bitter and the worst-hit will be the consumers and millions of riders who bring food to your doorsteps.