Zomato-NRAI face-off over Gold programme continues

In the past few weeks, Zomato has been witnessing tough times after negotiations between them and National Restaurant Association of India (NRAI) and restaurants protesting against its Zomato Gold programme fell through. The restaurants claim that the programme is highly unprofitable for their business. Over 300 restaurants joined the #Logoutcampaign and delisted themselves from the Zomato Gold service. NRAI President Rahul Singh was quoted as saying, “The situation is now aggravated through the anytime, anywhere, any-day discounting behaviour by aggregators. So, now restaurants have come together to detox consumers from discount addiction.” 

NRAI quoted a RedSeer report on their website and stated that Gold restaurant partners witnessed improved profits with business growth driven by better infrastructure utilisations. “Approximately 95 per cent of Zomato Gold members order more because of discounts. Gold partners have witnessed around 35 per cent growth in bill volumes after partnering with Zomato Gold,” the RedSeer report stated. The NRAI added that the report did not delve into the effect of deep discounting on the restaurant industry business. 

As is known, Gold is Zomato’s flagship programme aimed at encouraging customers to dine out at fine-dine restaurants. Last month, Zomato extended its Gold programme to home delivery orders for new as well as existing members. This service is available in 16 cities for now. Gold on delivery will offer the second-highest priced item on the order for free, except for combos, MRP items and special dishes. It will only apply on minimum order values of Rs 300, with discount capped at Rs 300 per order. 

Now the NRAI has slammed Zomato for extending this Gold programme to home deliveries. Anurag Katriar, President, NRAI, was quoted on their website, saying, “The restaurant body is firm on its stance that Zomato Gold in its current form is an unacceptable proposition and that it had categorically pointed the issues unequivocally to the Zomato team in its recent meetings. However, in utter disregard to the viability of restaurant fraternity, they have chosen to extend the programme further to the delivery vertical as well. This will be calamitous to the business in the delivery segment and we appeal to all restaurants and cloud kitchens entrepreneurs to stay away from Zomato Gold on delivery. Offer right quality at the right price, rather than falling for such discount gimmicks.” 

The NRAI has affirmed that Zomato Gold for both dine-in services and home deliveries was unacceptable. Although Zomato Gold has revised the terms on the dine-in feature, the NRAI said that the food service and delivery aggregator chose to ignore the core issue of deep discounts. “They instead chose to curtail the usage by the customer, which is very much against the original thesis of promoting eating out of the home. This is yet another example of unilateral change of goalpost by Zomato that collects money from both – the Gold subscribers and restaurant partners – and yet keeps making unilateral changes on terms of engagement for both,” said Katriar, in his statement on the NRAI website. 

The NRAI believes that this service will be calamitous to businesses in this sector and is pushing more restaurants to join them via the #ZoGoIsNoGo campaign.