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Online food discovery players agree to address concerns over deep discounting

Forum Gandhi Mumbai | Updated on August 21, 2019 Published on August 20, 2019

Over 2,500 restaurants have logged out of online discovery platforms, according to sources

 

Online food discovery companies have agreed to tweak their schemes and offers in a manner that addresses restaurateurs concerns around deep discounting.

The National Restaurateurs Association of India (NRAI) has met Zomato, MagicPin, Gourmet Passport, EazyDiner and NearBuy over the past two days and are trying to cobble up an agreement.

“Restaurateurs have asked all aggregators to rejig their features in order to detox from the addiction of deep-discounts that has crippled the industry,” said NRAI.

Rahul Singh, President of NRAI, said that the Assocation and aggregators agreed that technology is the backbone to enable restaurant discovery and a friction-less experience to the guests. However, he added that guests should not be lured by devaluing the core product at a restaurant.

On August 15, 300 restaurateurs signed up to the ‘LogOut’ campaign against online food discoery platforms such as Zomato, NearBuy, MagicPin and EazyDiner, challenging their deep-discounting practices. So far, over 2,500 restaurants have logged out of online discovery platforms, according to sources.

Discounting - one of the worst aggregators can do

Over the past two days, NRAI held meetings with the said aggregators and during the meeting, it was understood that aggregators were promoting deep-discounts to stay competitive. Singh added that, while one aggregator gave 1+1, the other had to adopt a 50 per cent discount scheme in order to stay relevant.

“What hurts the most is that these deep-discounts are funded by the restaurant industry and not the aggregators. Moreover, as opposed to the general perception, restaurants do not get any share of the proceeds that aggregators generate from guests as subscription fees,” said Singh.

NRAI had said that rampant discounting is one of the worst things aggregators can do because they are conditioning customers into de-valuing the product. “The idea of scoring a discount should make guests feel special and not give them a sense of beating the system,” Singh explained.

“Discount is a privilege and not a right. Discounting works well in the retail space, because brands can limit supply (or at least make it look like supply is limited), and therefore create a sense of urgency in the eyes of the consumer. Unlike retail, where end of season sale is to clear leftovers, a restaurant doesn’t serve leftovers at a discounted price. It’s all prepared fresh and made to order,” he added.

Published on August 20, 2019
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