Here is Why Restaurant Associations Are Against Zomato Gold In Delivery

Amid the ongoing feud between the food tech giants and the restaurant owners, Bengaluru-based Zomato is now facing backlash from Indian Hotel and Restaurant Association (AHAR). According to reports, AHAR which has 8,000 members across the country has decided to boycott Zomato Gold in delivery feature with immediate effect.

The association has taken this step after the food tech unicorn was accused of making deliveries from illegally-run kitchens, offering steep discounts to Zomato Gold members and issues related to unavailability of delivery executives.

Entrepreneur India has reached out to Zomato and AHAR for comments. We will update the story as soon as we hear from them.

According to the reports, AHAR president Santosh Shetty on behalf of the association has clearly instructed the food tech company to scrap the scheme. However no action has been taken by the company on this matter. He also clarified that actions have been taken against the Gold feature on delivery and not on dining. According to the association, the feature only benefits the food aggregator company and not the restaurant owners.

Related Story: Will Launch Of Zomato Gold In Delivery Fuel Its Feud With NRAI?

What Is The Issue?

The restaurant owners and food aggregators have been locking horns over deep discounts offered by the food tech companies. Fueling the feud, Zomato had launched its Gold feature to its delivery segment in September. Under this feature, Gold members will get the second-highest priced item on the order for free, except for combos, MRP items and special dishes.

During that time, National Restaurant Association Of India (NRAI) President Anurag Katriar termed the launch as a desperate attempt to "shore up the sinking fortunes of their flagship Zomato Gold programme". "Dining out but now it is being extended on deliveries too! Essentially, it is now a program that merely promotes deep discounts on both dine-in and delivery verticals, the cost of which is borne solely by the restaurant partners," Katriar said in a statement.

Apart from scrapping the Gold in delivery service, AHAR has also demanded to put a stop to the alleged arbitrary commissions charged by Zomato. According to the association, delivery commissions charged by the company shoots up to 22-25 per cent. Thus, the restaurant owners demanded a cap of 15per cent including Goods and Services Tax. It said that the increase is eventually borne by the customer as the eateries are forced to increase prices of the food items.

On this step by AHAR, NRAI believes that this will affect Zomato's business in Mumbai where AHAR is based out of and has a fairly strong presence. "NRAI has been very clear that Zomato Gold is bad for business and makes no commercial sense and hence carried out a very successful #Logout campaign. We stopped short of doing that for delivery because as a responsible industry body, we wanted to give talks adequate chance. However, it hasn't progressed at the desired pace and if things don't move quickly, we may be compelled to shun talks and look at other options. All options are open to us," said NRAI spokesperson.

Tussle With NRAI and #Logout Movement

In August, NRAI had met the food aggregators highlighting eight issues including deep discounts, high and uneven commission charges, arbitrary terms and conditions, private labels etc, faced by restaurants due to the food tech companies.

The association had begun the #Logout campaign to protest against predatory pricing and heavy discounting practices by the food aggregators. Following this, several restaurants had de-listed themselves from the platforms such as Zomato Gold, EazyDiner, and Dineout's Gourmet Passport.

During the follow-up meeting in September, NRAI had said that while both Zomato and Swiggy presented concrete roadmap to deal with issues related to deep discounting, lack of transparency, no progress was made on issues related to Zomato Gold.