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Last Updated : Aug 20, 2019 07:24 PM IST | Source: Moneycontrol.com

Food business isn't like retail where discounts are given for clearance of products, says NRAI

The NRAI has been meeting restaurant aggregators after over 2,500 restaurants decided to opt out of them, citing a decline in their revenue due to deep discounts offered to the customers on their platform.

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The food business is not like retail, and the clearance of items through deep discounting does not make sense, said National Restaurant Association of India on August 20, after having met restaurant aggregators such as Zomato over the issue of deep discounting offered for dining in restaurants.

It added that the restaurant aggregators have agreed to rejig their features in order to remove deep-discounts from their platforms.

"NRAI and aggregators were in agreement that technology is the backbone to enable restaurant discovery and a friction-less experience to the guests. However, guests should not be lured by devaluing the core product at a restaurant. Therefore it was decided, that all aggregators will rejig their features which will allow the restaurant-customer ecosystem to detox from addiction of deep-discounts that has crippled the industry," NRAI said in a statement.

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The NRAI has been meeting restaurant aggregators after over 2,500 restaurants decided to opt out of them, citing a decline in their revenue due to deep discounts offered to the customers on their platform.

While Zomato offers a subscription service called Zomato Gold, which offers 1+1 meal options across select restaurants, companies such as EazyDiner are offering 50 percent discount schemes in restaurants in order to attract customers.

Zomato claims it has around 6,000 restaurant partners and 1 million subscribers of Gold.

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

"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," it added.

One of the aggregators, DineOut, said that they ran promotional campaigns for a shorter duration and not through the year. They also said that the restaurants were free to decide the cover charge for these promotional offers.

"We do not believe in the concept of deep discounting and have always adhered to a “sustainable discounts model” which is aimed at attracting more diners to our restaurant partners without affecting their margins," the company said in a statement.

"In consultation with the restaurants,we also run promotional campaigns for shorter duration ( and not through the year) such as the “Great Indian Restaurant Festival” which gives a higher discount to the consumer but for only limited covers per restaurant per day.

The restaurants are free to decide this cover limit, black out timings and other such customization that a restaurant might need to run their businesses in a more sustainable manner," it added.

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First Published on Aug 20, 2019 04:38 pm
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