While these apps help lure diners to restaurants, restaurants say such steep discounting is hurting business, says National Restaurant Association of India
#Logout is what restaurants are using to silently mark their protest against membership programmes that allow diners to indulge in bargains
New Delhi: If you live in Gurgaon, chances are that starting Thursday some restaurants will refuse to accept discounts and deals offered by the likes of EazyDiner (Prime), Zomato Gold, Dineout, NearBuy and Magicpin in what can be seen as a sign of growing unrest brewing between the restaurant industry and India’s online reservation and discounted membership platforms.
#Logout is what restaurants are using to silently mark their protest against membership programmes that allow diners to indulge in bargains such as “one plus one" on drinks and food on their in-restaurant bills.
While these apps help lure diners to restaurants, restaurants say such steep discounting is hurting business, the National Restaurant Association of India (NRAI), which is leading this protest said on Wednesday.
Over 300 restaurants just in Gurgaon said they are logging out of these offer driven paid membership programs such as Zomato (Gold), EazyDiner (Prime), MagicPin among others.
Restaurants, part of the NRAI in the cities of Delhi, and Mumbai said they would de-list from these platforms and apps too.
The move is likely to gather pace in other cities as well during the week, as restaurants across the board join in, said Rahul Singh, president, National Restaurant Association of India (NRAI).
The association’s local chapters were informing restaurants and making the necessary arrangements on Wednesday evening, Singh said.
To be sure, the restaurants will however remain listed on delivery and search platforms such as Swiggy, UberEats, and Zomato.
Singh added that the dine-in industry is getting endangered by such deep discounting as such discounts he added were being funded by restaurants themselves. “When you have anytime, anywhere discounts you are basically distorting the system," said Singh who is also the founder at The Beer Cafe. “Five years back you could see reviews and recommendations on these search and reservation platforms--today it is just about offers."
The agitation against such membership programs comes at a time when restaurant owners say they are feeling pressure on dine-in sales as higher rentals, a general slowdown in consumer sentiment, and removal of the input tax credit under the revised goods and services tax (GST) is already hurting sales.
Members of NRAI said they are expecting such apps to revisit discounting methodology and recalibrate it keeping in mind multiple stakeholders in the business i.e., restaurants, the aggregators or platforms and customers.
Under the revised taxation structure as introduced in 2017, GST rates on restaurants were lowered to 5% from 18%. However, the tax regime forbids restaurants from claiming an input tax credit against tax paid on raw materials and other expenses.
“NRAI’s Gurgaon chapter has come together in the #logout movement to give Gurgaon freedom from aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing," NRAI said on Wednesday. "Restaurants have already suffered due to increasing rentals, and denial of input tax credit. The situation is now aggravated through the anytime anywhere any day discounting behavior. The restaurateurs have therefore come together to detox consumers from discount addiction. It will have some withdrawal symptoms for a short term, but one has to see a healthier lifetime cycle."
India's food tech ecosystem has been gaining popularity and investor interest; especially as more urban Indians eat out and order home. This has led to the spurt in the number of companies offering benefits tied to dine-in and delivery of food.
For instance EazyDiner, a restaurant reservation platform offers regular members of its EazyDiner Prime program savings of over ₹50,000 a year at some of the most premium restaurants, according to the company's website. Dineout’s membership program Gourmet Passport offers annual memberships that start at ₹499 and go up to ₹2,499 at its 1,650 partner restaurants.
"We do not see any impact on our Gold subscribers due to the #Logout campaign. Most restaurant owners in these cities are in touch with us and are not planning to join this campaign. We are told that #Logout is being instigated by a few restaurant owners and is not the voice of the restaurant industry at large. For the industry, Zomato Gold has been a key business driver for the last 18 months and they don't want to be driven by interests of a few restaurant owners," a company spokesperson said.