Zomato offers tweaks to deep discount scheme, but restaurants are not buying it

Forum Gandhi Mumbai | Updated on August 22, 2019

NRAI calls the offer a knee-jerk reaction to its LogOut protest

Zomato on Wednesday sought to call a truce with restaurateurs, informing them of “upcoming improvements” in its ‘Zomato Gold’ scheme by September 15. It asked the restaurateur-partners to sign up again on Gold before August 26.

However, the National Restaurants Association of India (NRAI) declined the offer. In a statement, it said the offer is a “tweak in the drug which doesn’t solve the addiction”.

On Tuesday, Zomato had met NRAI representatives to discuss the deep discounting issue. According to sources, the meeting between was inconclusive.

“Discussions started off on a good note with them (Zomato) accepting that the programme had a shortcoming. However, the meeting was inconclusive,” a source said.

‘Protecting’ restaurants

In a mail sent to restaurants on Wednesday, Deepinder Goyal, Zomato founder, said the company had noted the NRAI’s concerns, and how discounting is hurting the restaurant industry. Zomato empathised with them, he said, assuring that “we are going to do everything we can to protect the underlying asset behind our product — your restaurant”. It offered some changes to Gold by September 15.

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

NRAI, in response to Zomato’s mail, said the latest move is a knee-jerk reaction to the LogOut campaign and the meeting held on Tuesday.

“Since its launch in November 2017, this (Gold) programme has been shifting goalposts. (From) what started as an exclusive invite-only privilege to a marketplace for ‘bargain hunters’, a word admitted by the founder of Zomato in recent tweets...this Gold has lost its sheen forever.”

Zomato, in its mail, said the biggest pain point the NRAI flagged was that users hopped between places on a busy evening, claiming 1+1 starters at one place, 1+1 main course at another, and 2+2 drinks at yet other.

Limited use

To solve this, “we will limit Gold usage by a single user to one unlock per day”, which will ensure that customers complete their dining experience at a single restaurant, “bringing the net effective discount down significantly”, it said.

“In spite of all these changes to the fair usage policy, we believe that Gold remains an attractive value proposition for our users,” said Zomato.

Another problem pointed out by restaurateurs was the multiple number of Gold unlocks happening per table. To combat this, Zomato proposed to limit it to a maximum of two per table. It also proposed to increase the Gold membership fee to above ₹1,800.

“Zomato proposed to kill Infinity dining, as it was an under-researched programme,” said a source. “The Gold programme is crucial to Zomato, and killing it is difficult for the company.”

The NRAI said it is united in its fight against deep discounting, and will therefore ‘StayLoggedOut’.

BusinessLine’s query to Zomato remained unanswered.

Published on August 22, 2019

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