Zomato, Swiggy, NRAI Had Progressive Talks, However No Clarity On Solutions Zomato and Swiggy presented concrete roadmap to deal with issues related to deep discounting, lack of transparency, during the follow-up meeting with NRAI

By Shreya Ganguly

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Foodtech companies Zomato and Swiggy presented concrete roadmap to deal with issues related to deep discounting, lack of transparency, during the follow-up meeting with NRAI (National Restaurant Association of India) on September 13, 2019. However, "no significant progress was made on the subject of Zomato Gold," NRAI said in a statement.

According to the restaurant association, the managing committee will meet in Mumbai this week to discuss the points highlighted through this meeting and then decide on its "next course of action".

Follow up meetings with both Swiggy and Zomato on the eight core issues were largely positive and talks have progressed well so far. Both aggregators have presented concrete roadmap and apprised the NRAI core team of the progress made thus far.

"NRAI plays an important role in our continued efforts to enable restaurant partners to grow sustainably while benefiting from the latest technology interventions. Our recent discussions on the various projects have been well received and brought us one step closer to achieving our combined goals," said Swiggy spokesperson in a statement.

NRAI Had Highlighted Eight Issues

In August, NRAI had met the food aggregators and also wrote letters to them highlighting eight issues faced by restaurants due to the foodtech companies. According to the letter, some of the issues are:

Deep Discounts: According to NRAI, discounts ranging from 30-70 per cent are offered for the entire year. This "distorts the market and hinders profitable growth of the sector". He also highlighted that these discounts are generally funded by the operators and sometimes under "coercion".

High and uneven commission charges: The commission charges levied by aggregators are predatory and uneven, according to the association. It requested the aggregators to create a transparent system of charges which will be based upon average order value (AOV), volume of business, etc.

Arbitrary terms and conditions: The terms and conditions upon which the restaurants' enlist themselves on aggregator platforms are not standardised, according to NRAI and tends to favour the aggregators. Thus, the association directed the companies to come up with a standardised framework and contracts for the restaurants.

Private Labels: NRAI also highlighted that large delivery aggregators have been using sales and user data to create their own private label brands and kitchens. This leads to unfair competition with other restaurants.

Customer data masking: The foodtech companies do not share user data with the restaurants, which disconnects them from consumers, said NRAI. They also use the data to divert traffic for their own commercial benefit. "In the interest of consumer privacy, we also want strict assurances against monetising the data of our customers," the letters read.

Forced use of services: According to NRAI, the restaurants are allegedly forced to use delivery services of aggregators even if they have their own delivery infrastructure. Due to this, the restaurant partners suffer losses if the aggregator lacks delivery personnel in certain areas. This issue can get solved if the restaurants are allowed to use their own logistics services.

Arbitrary rules of engagement: The aggregators levy unreasonable rules and penalties on the restaurants related to areas like order acceptance, preparation, cancellation etc. The aggregator also does not take any responsibility for covering financial losses made by the delivery personnel in case of wrong delivery, lack of delivery personnel, technical glitch on their apps, etc.

Search algorithms: According to NRAI, the parameter used for ranking the restaurants on its platform is also"not transparent or consistent".

During the earlier meeting in August, Zomato and NRAI began on a wrong note after the company stated their intention to introduce Zomato Gold on the delivery vertical as well. Thus, the issues related to Gold continue to remain unclear. "We continue to have discussions with the NRAI on all issues faced by the industry and are focused on providing solutions sustainable for all participants," Zomato spokesperson said.

What Is The #Logout Movement?

According to reports, the NRAI 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.

The issues between the companies and the restaurants had increased so much that Piyush Goyal, Minister of Railways and Commerce, had offered to intervene and solve the issues if both the parties could not resolve it among themselves, according to reports.
Shreya Ganguly

Former Features Writer

Covering startups and investments for Entrepreneur India. Previously a startup correspondent at Inc42. Reach out to me with interesting story ideas at sganguly@entrepreneurindia.com. 

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