Restaurants Opt Out Of Swiggy Dineout Amid Deep Discounting Issues

Several high-end cafes and restaurants in the Delhi-NCR region including Cafe Delhi Heights, Smoke House Deli, Social, The Beer Cafe, and Mamagoto have delisted themselves from Swiggy Dineout, a YS report has stated.

Indigo Hospitality, Impresario Entertainment and Hospitality and Simmering Foods and Restaurants have also decided to deregister themselves from the platform, the report added.

The move comes shortly after Inc42 reported that foodtech platform Swiggy Dineout was in trouble after NRAI asked restaurants to stay away from the dine-in features of the startup or log out from the app.

NRAI has previously stated that Dineout’s deep discounting techniques disrupt the core dine-in business of the restaurants and ‘popularising a dangerous culture of discounting that will be irreversible’.

This is not the first time that NRAI has launched a campaign against dine-in features offered by foodtech companies. In 2019, NRAI launched a #Logout Campaign against Zomato Gold. 

The reason at the time was that Zomato Gold charges high commissions from the restaurants for customer bookings and provides huge discounts to the subscribers.

With cashback and huge discounts (going as high as 30% on bill value plus bank discounts), the dine-in business via foodtech is not profitable for the restaurants, NRAI has claimed. Furthermore, these cafes and restaurants have to pay a commission of 4-10% to the foodtech aggregators.

“Thousands of partners continue to join us each month and list on Swiggy Dineout and only a handful of restaurant partners have expressed their desire to delist from the platform. We continue to engage with restaurant partners and NRAI representatives to revisit their choices,” a Swiggy spokesperson said in an emailed query.

Swiggy’s Big Moment With Dineout In A Dilemma?

The decade-old startup was acquired by Swiggy in May 2022 in a $200 Mn deal from its former owner Times Internet. 

While Dineout would have continued to be an independent app, founders Ankit Mehrotra, Nikhil Bakshi, Sahil Jain and Vivek Kapoor would join Swiggy.

Swiggy had acquired Dineout in-line with plans to acquire a large chunk of the food industry going digital. Whether it was restaurant discovery or table reservation or cloud kitchens, online food ordering or take away features, Zomato and Swiggy have been at loggerheads in setting foot within the ecosystem.

Zomato’s plans for Zomaverse – the live food festival – also compete with Dineout’s SteppinOut acquisition. Consequently, Swiggy will also be able to host multiple types of offline events and experiences, ranging from food festivals, night markets, stand-up comedy events and movie nights, among others. 

With restaurants logging out of Swiggy Dineout, the company will be in a dilemma since the YS report claims that 400+ brands and 900+ dining outlets across 13 cities in India have sent delisting notices to Swiggy in the last two weeks. Another 2,000 outlets are likely to follow, the industry body said.

Swiggy has over 15,000 restaurants and cafes on Dineout, the spokesperson said, claiming that these restaurants have the complete liberty to decide the discount they want to offer.

This is likely to put a hole in the income of the company amid rising losses, as Swiggy reported a loss of INR 1,165 Cr in FY21. 

The company is far from profitable and splurges on campaigns to onboard more and more restaurants. The logging out campaign by high-end restaurants is likely to leave Swiggy Dineout in a quandary.

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Update | October 27, 2022, 7:20 PM

The story has been updated with comments from a Swiggy spokesperson.