NRAI warns restaurants about aggregator deep discounting
The advisory comes when food delivery giants including Zomato and Swiggy are aggressively focusing on expanding their dine-in customer base
PTI
New Delhi, 9 Dec
The National Restaurant Association
of India has issued an advisory cautioning its members over deep discounting
and payment gateway tools offered by aggregator platforms for dine-in
operations.
The advisory comes when food
delivery giants including Zomato and Swiggy are aggressively focusing on
expanding their dine-in customer base.
NRAI urged restaurants to use
aggregator payment platforms only if the payment gateway services are unbundled
from the other services that it offers; and makes financial sense as a payment
gateway independently compared to other payment gateways.
In its advisory, NRAI asserted that
aggregators use deep discounting as a tool to attract customers, including the
restaurant's regular customers, to their platforms. The customers are then
incentivised to participate through aggressive cashback and discounts, which
eventually move the restaurants' existing customers to their platforms.
"We are fine with aggregator
platforms charging restaurants a reasonable fixed fee for securing
reservations. However, we believe it is not ideal to pay a high commission or
percentage of sales for dine-in reservations, nor should the use of their
payment wallet be mandatory.
"Therefore, NRAI urges all
restaurant owners to be vigilant about participating in deep discounting and
aggregator's payment gateway tools," NRAI stated in the advisory.
NRAI cautioned restaurant owners to
be vigilant and not be compelled to participate in the payment gateway tool
offered by the aggregator, "which will inevitably lead to deep discounting
programs, no matter how attractive they might seem".
"The benefits are short-term
at best. Based on how this played out with the delivery market, what is perhaps
most dangerous is the long-term, irreversible effects that this has on the
in-dining market: unsustainable discounts coupled with a platform wedged firmly
between you and your customer and reverse sharing of data that will inevitably
be used against the restaurants," stated the restaurant association.
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