Gurugram restaurants pull out of dining apps offering deals; other cities to join

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If you live in Gurugram, chances are that starting August 15 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 August 14.

Over 300 restaurants just in Gurugram said they are logging out of these offer driven paid membership programmes such as Zomato (Gold), EazyDiner (Prime), MagicPin, among others.

Restaurants, part of NRAI in 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 August 14 evening, Singh said.

To be sure, the restaurants will, however, remain listed on delivery and search platforms such as Swiggy, UberEats, and Zomato.

He said the dine-in industry is getting endangered by such deep discounting as such discounts 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 programmes 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 & 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: restaurants, the aggregators or platforms and customers.

Under the revised taxation structure as introduced in 2017, GST rates on restaurants were lowered to five percent from 18 percent. However, the tax regime forbids restaurants from claiming an input tax credit against tax paid on raw materials and other expenses.

“NRAI’s Gurugram chapter has come together in the #logout movement to give the city freedom from aggregators, who have distorted a vibrant marketplace by aggressive discounting and predatory pricing,” NRAI said on August 14. "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. The restaurateurs have therefore come together to detox consumers from discount addiction. It will have some withdrawal symptoms for the short term, but one has to see a healthier lifetime cycle.”

India's food tech ecosystem has been gaining popularity and investor interest as people in urban areas 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 programme savings of over Rs 50,000 a year at some of the most premium restaurants, according to the company's website. Dineout’s membership programme -- Gourmet Passport -- offers annual memberships that start at Rs 499 and go all the way to Rs 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.