Complaining about high discounts, commission burden and GST tax burden, the National Restaurant Association of India (NRAI) had initiated a #LogOut campaign to delist member restaurants from the unfair partnership with the food service aggregators (FSA) such as Zomato, Dineout, Nearby, Magicpin and EasyDiner.
Now, the Federation of Hotel & Restaurant Associations of India (FHRAI) has jumped in and has warned of a nationwide protest against apps such as Zomato and Dineout, unless they’re willing to initiate talks to clear out the issue of heavy customer discounts to have a win-win outcome for both parties.
In a letter, released on Sunday evening the FHRAI addressed FSAs and pointed out the “unethical” practices and called for a review of their agreements with restaurants. It accused the platforms of making contracts that benefit themselves consistently across the country. The association demanded a “model contract” which would be mutually agreed on by both the app platforms and the restaurants, saying that prevailing conditions indicate a dominant behaviour on the part of the FSAs.
It added that taking “absurd” orders, aggressive discounting schemes and enforcing faster delivery time has put restaurants in an awkward position.
“Restaurants are constantly but subtly threatened to participate in deep discounting schemes without respite through the year with one scheme getting replaced by another. Our members are neither given an option nor the opportunity to agree nor are they even consulted. Promises made while launching any new scheme is almost always broken by changing the rules itself,” said S K Jaiswal, vice president of FHRAI.
The association also highlighted the “unreasonably high commissions, payment terms and arbitrarily applied additional charges” they’ve been charged to be a part of the inventory.
It also clarified that restaurants are willing to do business with apps, but the policies and contracts need to be reconsidered to have a balance. Restaurants are charged with 25% commission and additional commissions for promotions and discovery, along with GST. Apps such as Zomato and Swiggy also charge the restaurants and customers for deliveries.
The restaurants are also asked to pay high fees to be certified and rated for hygiene by the company’s agents as FSAs did for customers rating. The federation has also called out the FSAs for masking the customers and disconnecting the restaurants from its customers.
A day before the letter was released, Zomato CEO and founder Deepinder Goyal took to Twitter to acknowledge the problems of the restaurant partners and apologise. The company offered to initiate dialogues with restaurants to come up with policies and schemes that benefit the restaurant owners.
“Somewhere, we have made mistakes and things haven’t gone as planned. This is a wake up call that we need to do 100x more for our restaurant partners than we have done before,” Goyal tweeted.
He also asked the restaurant partners to proactively look for ways to reduce operational cost to make dining out more affordable for consumers, which would reduce discounting and ease some of the cost burdens.