Restaurants Want Zomato, Swiggy To Be Classified As Ecommerce Companies

After another set of talk with food aggregators like Zomato and Swiggy resulted in little progress, the National Restaurants Association of India (NRAI) has now reached out to the department for promotion of industry and internal trade (DPIIT) to classify the online food delivery platforms as ecommerce marketplaces.

As per an ET report, the restaurant associations demanded that the ecommerce guidelines such as FDI norms should also be applicable to online food delivery platforms like Zomato and Swiggy. Anurag Katriar, president of NRAI, said that the association will also be approaching the Competition Commission of India (CCI) for the same.

NRAI claims that practices like deep discounting, high and uneven commission charges, data masking and mandatory bundling of services have been eating into the businesses of small restaurant owners. The association believes that bringing the online food delivery platforms under the existing ecommerce guidelines will bring in some relief to the restaurant owners.

Though the DPIIT of the minister of commerce and industry is working on ecommerce guidelines, the updated foreign direct investment (FDI) policies do have certain regulations for ecommerce platforms. The FDI guidelines prohibit ecommerce companies from influencing market prices and operating inventory-based models.

How Will This Help?

In August 2019, several restaurant owners organised a nationwide protest against food service providers. This happened after almost 300 restaurants kicked off a #LogOut campaign protesting the Zomato Gold programme that gave heavy discounts on food and drinks at diners.

Swiggy too was dragged in after the Federation of Hotel & Restaurant Associations of India (FHRAI) backed the movement and highlighted the issues of deep discounting and unfair practices of food inventory and delivery services. Since then, several restaurant associations such as Indian Hotel and Restaurant Association (AHAR), NRAI and FHRAI have been holding talks with the food aggregators in their personal capacity, highlighting the issues raised by their members.

Katriar noted that while restaurants have successfully managed to solve certain issues, there is more to it. NRAI has been trying to reach a conclusion on others. “While we are in talks, it is also important that the guidelines are issued with clarity,” the NRAI president noted.

Zomato Gold Continues To Be A Major Issue

While matters with other dine-in aggregators have been more or less resolved, Zomato Gold subscription continues to be a point of major contention. Restaurant owners, listed on Zomato Gold, have said that the service only benefits the aggregators and not the restaurants since it offers big discounts and free food and drinks.

Major protest against the dine-in Zomato Gold services in August did not deter Zomato’s plan to expand Gold services for online delivery. A month later, in September, the company officially announced the expansion.

Subsequently, AHAR noted that Zomato Gold eats into the profits of the restaurants as it is difficult for them to even meet the operational cost. The association had also highlighted the same with the Zomato in a closed-door meeting in November 2019.

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