More than 300 famous restaurant brands in millennium city of Gurgram are breaking their association with aggregators and table reservation services including Zomato, EazyDiner, Nearbuy, MagicPin and Gourmet Passport. These restaurants have blamed unsustainable "deep discounting" strategies by aggregators. The restaurants have planned to exit dine-in programmes from today which gives customers heavy discount on meal bills. Financial daily, The Economic Times reported that eateries across other cities will follow the suit in coming days.
National Restaurant Association of India (NRAI) president Rahul Singh highlighted heavy rentals and denial of input tax credit which has eroded their revenue sharply. He added, "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 behaviour by aggregators. So now restaurants have come together to detox consumers from discount addiction." Delhi, Pune, Mumbai, Kolkata and Bengaluru will be next, Singh further added. NRAI has a representation of around 500,000 restaurants across India.
Moreover, restaurants are also planning to issue advisory to customers. One of notes to be published for customers read, "We are here to provide you a wholesome experience through a sustainable business environment. Zomato Gold, EazyDiner, MagicPin, Nearbuy, etc are resorting to unjust practices and hurting our business. We have no option but to #LogOut as a mark of our protest." For instance, Infinity Dining programme launched by Zomato in July for its Gold members, a user a can order unlimited meals at restaurants for a fixed price. Restaurants have argued that such programs have deeply hurt their profitability but to stiff competition in market they are forced to participate.
Priyank Sukhija, CEO of First Fiddle Restaurants said, "We were being arm-twisted enough — it was high time we took such a step. We can't offer such unsustainable discounting to consumers, it disrupts our entire books." Multiple rounds of meetings between the aggregators and eateries have been unsuccessful. Sakhija also said, "We have held multiple meetings with aggregators like Zomato on their Gold offering on the discounting issue — unsuccessfully."
Other restaurants argued that deep discounting has led to sharp increase in their operating cost. Also after they were denied input tax credit their revenues have further eroded. "Discounting as much as 50% leads to steep increases in operating costs. As it is we have been denied input tax credit. This sort of discounting also devalues the brand, and is simply unsustainable," added Lalit Ahlawat, cofounder of Striker Hospitality and Soi Hospitality.