FHRAI asks Zomato, Swiggy to review discounting schemes or face protests

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An umbrella body of hotel and restaurant associations has asked food service aggregators like Zomato and Swiggy to review their discounting schemes and engage in a dialogue for addressing restaurant owners' issues.

The Federation of Hotel & Restaurant Associations of India (FHRAI) has also warned food aggregators such as Zomato, Swiggy, Nearbuy, Dineout Prius Heights, EasyDiner and Magicpin of nationwide protests if they continue with their practices and schemes.

The federation is the apex body of regional associations of hoteliers and restaurants.

The FHRAI in a statement said that it has asked the food service aggregators (FSAs) to engage in a 'fruitful dialogue' to arrive at a win-win outcome for all.

Calling for a review of all their discounting schemes, the federation said as a technology partner, by merely hosting its members' inventory, FSAs cannot hold sway and arm twist the traditions and aspirations of millions of entrepreneurs in India.

"Unfortunately this new way of impractical, unaffordable and unconscionable discounting has put the hospitality industry in a very awkward situation," FHRAI Vice-President Gurbaxish Singh Kohli said.

The most common complaint with the FSAs is about the contracts being one sided. These contracts are not even consistent across the industry and almost always unfair towards startups as against established brands, he added.

"A model contract which is mutually agreed upon has to be accepted. As such a conduct is indicative of dominant behaviour and is indeed exploitative," Kohli said.

Further, the agreement terms are not sacrosanct as they are frequently and unilaterally changed from time to time and always in favour of the FSAs, he added.

"We are absolutely in favour of doing business, a business that is a win-win for everyone involved," Kohli said.

The FSAs methods and practices are unbearable and actions needs to be taken in the best interest of the industry.

The FHRAI has also pointed out to the unreasonably high commissions, payment terms and arbitrarily applied additional charges as well as unethical practices by the FSAs, the statement said.

Restaurants have voiced out about the imposition of FSAs' absurd food acceptance, food preparation, food collection time with penalties and a negative grading system, it added.

Restaurants are constantly but subtly threatened to participate in deep discounting schemes without respite throughout the year with one scheme getting replaced by another, FHRAI Vice-President S K Jaiswal said.

"Our members are neither given an option nor the opportunity to agree nor are they even consulted. Promises made while launching any new scheme is almost always broken by changing the rules itself," he added.

One of the most critical terms which the FSAs changed and which destroy restaurant business is the number masking of customers. By doing so, FSAs have completely disconnected restaurants from its customers, the statement said.

Comments from the FSAs could not be obtained at the time of filing the story.