Restaurant bodies warn against heavy in-dining discounts offered by payment aggregators
Times of India | 10 December 2024
12 Kolkata: National Restaurant Association of India (NRAI), the apex body representing the restaurant industry, has warned its members of the potential long-term adverse effects of large-scale in-dining discount programmes offered by aggregator payment platforms. The Hotel and Restaurant Association of Eastern India (HRAEI) also said the practice was hurting profitability and has planned to write to its members regarding this.
The NRAI advisory said these programmes, while appearing beneficial in the short term, could threaten the economic stability and autonomy of restaurants. Payment aggregators cum delivery apps like Swiggy and Zomato offer benefits and discounts to customers who opt for in-dining bookings.
"In the recent past, deep discounting has caused significant challenges in the food delivery market, and the NRAI warns that similar tactics are being employed to capture the dine-in market through aggressive aggregator payment gateway adoption," NRAI said. It said deep discounting has led to unsustainable discounts, which alter price structures, creating unreasonable customer expectations and undervaluing the dining experience.
NRAI president Sagar Daryani said, "Our industry is at a crossroads, and the decisions we make now will shape the future of dine-in operations. Deep discounting may appear appealing in the short term, but they also pose long-term risks to restaurants' independence and viability, especially when mandatorily bundled with payment gateways." Daryani said aggregator payment gateways cause various issues for eateries. These networks reward clients with aggressive discounts and cashback, sponsored at the expense of the restaurants themselves. However, restaurants must pay substantial commissions.
Sudesh Poddar, president of HRAEI, said that some food delivery apps, which started in-dining bookings, are telling customers to pay through their apps and restaurants have to pay a 6% commission to these apps.
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