The restaurant industry that has been clashing with food delivery platforms over prices and commissions is planning its own digital offerings and delivery services to reduce dependence on aggregators such as Swiggy and Zomato.
Hit hard by the coronavirus outbreak and the lockdown, restaurants are also looking at a common loyalty programme that can help the business grow in the future, which will be very different from the pre-coronavirus world.
“Aggregators have become virtual landlords, they came in trying to solve a genuine problem but eventually they are just decimating the small businesses with their business policies,” Thomas Fenn, a National Restaurant Association of India (NRAI) member, said addressing a virtual town hall on May 6.
The industry should work together to create an alternate technology solution to expand business in the post-Covid19 world, Fenn, who owns the popular Mahabelly restaurant in New Delhi, said.
Close to 500 people had logged into the Facebook live session. Follow our LIVE blog for the latest on the coronavirus pandemic
Citing NPCI offering UPI, TCS helping run passport services and Infosys the GST Network, Rahul Singh, cofounder of Beer Café, said the industry was looking for a similar solution to bring all restaurants onto a common platform.
The owners have complained against aggregators' predatory pricing, high commissions and even hiding customer data from restaurants.
“They have been using our own data to develop private label solutions and their own brands, at the same time they hide details about customers who are ordering from us,” said Fenn.
Even commissions had shot up to 24 percent from around 6 percent, making life difficult for restaurants, he added.
Swiggy has its private labels like The Bowl Company and Homely. It also runs Access Kitchens or virtual kitchens that process orders only from Swiggy. Even Zomato has a cloud kitchen called Zomato Kitchen.
This is the first time the food and beverage industry is trying to create an alternative digital platform, the success will depend on the coming together of a highly fragmented and dispersed sector.
The technology used by Swiggy and Zomato has made ordering and tracking deliveries simple, how much it can be replicated by an industry body run by restaurant owners and celebrity chefs is something that needs to be watched.
Three factors -- customer loyalty, online orders and payments and digitised delivery logistics—will drive the solution NRAI is looking for.
It can leverage social media platforms like WhatsApp, Facebook or Instagram to reach out to consumers.
Given that Facebook was working with Reliance's Jio Platforms to expand into a hyperlocal delivery with small stores as suppliers, Fenn said something similar could be done in the food delivery business as well.
Most restaurants didn’t employ delivery staff to cut costs but outsourcing it to Swiggy and Zomato was working out to be more expensive, he said.
“For instance, we can leverage Dunzo, Delhivery and so many other players for our delivery partnerships, there are ways to connect restaurants to delivery partners by leveraging technology,” he said.
The restaurant industry had never worked on a common loyalty programme and that was something that could be looked at, NRAI president Anurag Katriar, also CEO deGustibus Hospitality, said.
“We are in an advanced stage of discussion around creating a restaurant network-wide loyalty programme, a customer can eat in one restaurant and get points redeemable in another restaurant, that will be a force multiplier for business,” he said.
This could be aimed at Zomato’s loyalty programme Zomato Gold that covers restaurants across major cities. This programme had been a flashpoint between Zomato and restaurant partners.
On “contactless dining”, a term Zomato and few other restaurant aggregators have thrown about, Katriar said NRAI was looking at bringing in a digital dining experience to make consumers feel safer when eating out.
NRAI represents more than 5 lakh restaurants in a $4-billion industry.
With restaurants shut across the country, the food and beverage industry has been one of the worst-hit sectors, with more than 70 lakh people looking at a bleak future.
NRAI has on multiple occasions sought the government's intervention to bail out the industry but, so far, nothing has come of it.
Not just restaurants, food delivery platforms are facing similar problems. With the lockdown in its third phase and an uptick in coronavirus cases, orders have dwindled.
Will the coronavirus outbreak tear apart a partnership that has changed the way India eats or will the warring sides find a way to stick it out? Only time will tell.Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.