NRAI Goes After 'Deep Discounts' in Delivery Services

After waging an all-out war against steep discounts by online food aggregators in the dine-in segment, the National Restaurant Association of India (NRAI) has now asked delivery platforms to do away with deep discounts while also addressing other issues.

The NRAI wrote to Swiggy, Zomato, Uber Eats, and Foodpanda on Monday to resolve the issues.

In letters written to all major online delivery aggregators, the association has said that during its interaction with restaurant operators, it was observed that operators displayed strong resentment at the current status of transparency, forced discounting, uneven commission structure and general high-handedness of the aggregators in the food delivery space.

"There was a high demand of immediately extending the #Logout movement to the delivery vertical as well. However, our responsibility as an industry body compelled us to engage in dialogue first," the letter said.

As in the case of dine-in services, the industry body complained about discounts being offered in the delivery segment throughout the year.

"Discounts are a privilege and are extended on occasions. However, in the current environment, deep discounts, ranging from 30-70 percent, are being deployed 365 days on delivery platforms."

This distorts the market and hinders profitable growth of the sector. These discounts are not sustainable nor are they beneficial to the industry at large," the letter said.

The association reiterated its stand that these discounts are mostly funded by restaurant operators and sometimes under "veiled coercion".

The letter also spoke of uneven commission charges. It said these charges are predatory and delivery service providers revised the charges unilaterally.

"These commissions or charges are not standard by any nature, rather they are exploitative and bereft of rationale. We request you to create a transparent system of commission or charges based on certain logical metrics such as AOV (Average Order Value), Volume of Business etc," NRAI said in a letter.

The association also noted that the aggregators do not share customer data with restaurants despite repeated requests and also sought assurances that the data would not be monetised.

It further observed that "big delivery aggregators are using the sales and customer data to develop their own brands, their own kitchens and diverting traffic thereby creating a grossly unfair playing field with other restaurants." NRAI described this behaviour as a conflict of interest on the part of the aggregators.

Anurag Katriar, Head of NRAI Mumbai Chapter, said: "Let me reiterate that we are not against the technology platforms, but our concerns are largely around these aggregators misusing their dominant position to indulge in predatory behaviour; commercially and in forming the terms of engagement."

Over the last 11 days, restaurants across the country led by the NRAI carried out the '#logout' campaign against deep discounts provided by foodservice aggregators (FSAs) in dine-in services, and a lot of the restaurants have logged out of the services of the aggregators.

NRAI has struck a deal with Dineout, Eazydiner, Nearbuy, and Magicpin to make favourable changes to their model and charges, as the four have agreed to rejig their products to do away with deep discounting. Zomato, which provides the Zomato Gold platform for dine-in services has stopped engagement with NRAI on after it had made some changes which did not go down well with the restaurants association.