• Wed. Oct 5th, 2022

Will Zomato Pay, Swiggy Diner have a negative impact on the restaurant industry in the long term? Why should restaurants pay a commission? 2022

ByStephanie M. Akbar

Sep 5, 2022

Will Zomato Pay, Swiggy Diner have a negative impact on the restaurant industry in the long term? Why should restaurants pay a commission?

STRONG POINTS

  • After draining every penny of revenue from the delivery industry, Zomato and Swiggy are trying to establish a solid footing in the restaurant market. In a message to its members, NRAI
  • Zomato and Swiggy’s rules of engagement with restaurants will unilaterally change as more customers change their payment habits in response to the lure of discounts: NRAI
  • When there is no commission on restaurant revenue, restaurants will end up paying Zomato and Swiggy 4-12% instead of the 1-1.5% charged by competing payment gateways: NRAI

National Restaurant Association of India (NRAI), a trade organization, has launched a fierce attack on food tech giants Zomato and Swiggy over their new products.

Zomato Pay and Swiggy Diner, which the organization says could also have a “negative influence” on the overall restaurant business, in the long term, have been the subject of advice from the NRAI, which has urged all its partner establishments to make an “informed decision”. .”

The National Restaurant Association of India (NRAI)who wonders why restaurants should pay a commission to food delivery companies to serve customers on their premises, has warned its members against joining new restaurant programs launched by Zomato and Swiggy.

Newer restaurant programs, such as Zomato Pay and Swiggy Diners, offer flat-rate discounts to entice users to pay restaurant bills through their apps. Restaurants will support the offers.

In its opinion, the NRAI asked the fundamental question: “Why should a restaurant pay a commission to an intermediary to offer a discount to its own customer?”

The group further said the programs offered restaurants no real benefit.

After earning every penny from the supply business, Zomato and Swiggy are trying to establish a solid footing in the restaurant market. In a message to its members, NRAI

Zomato and Swiggy’s terms of engagement with restaurants will unilaterally change as more people change their payment habits in response to discounts: NRAI

While competitors’ paid gateways cost 1% to 1.5%, restaurants will pay Zomato and Swiggy 4% to 12% where there are no fees on restaurant revenue: NRAI

Nationwide commercial appearance The Association of Food Places of India (NRAI) has launched a full-scale attack on food tech giants Zomato and Swiggy over their new options.

As a precaution, NRAI has urged all of its restaurant partners to use Zomato Pay and Swiggy Diner wisely, as the services could ultimately “negatively impact” the restaurant industry as a whole.

Zomato Pay allows common dining establishments to focus on interaction by offering discounts and promotions to customers through the app. Additionally, it offers a paid service for app users. However, Swiggy Diner allows users to reserve tables at restaurants at “discounted rates”.

According to the trade organization’s notice to its members, “NRAI firmly believes it is its inherent responsibility to evaluate its members on the finer nuances of these large-scale packaging and products, as they affect not only the financial well-being of foodservice establishments, but can also negatively impact the overall foodservice ecosystem in the long run.

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Zomato and Swiggy have been described as ‘middlemen’ by the NRAI, which said the food supply companies were trying to establish an ‘agency stake’ in the restaurant industry after sucking up the ‘last ounce of ‘money’ from the supply segment.

Additionally, NRAI claimed that restaurants could be forced to pay the “exorbitant” costs of high rebates and commissions while food tech companies sign up customers at the restaurant.

According to the NRAI, “As more people change their payment practices due to the lure of rebates and cashback, their terms of engagement with restaurants will unilaterally change.

According to the statement, intermediaries will now have free rein to invade the restaurant experience as they have been denied access to critical information about restaurant supply customers.

According to the NRAI, restaurants are required to offer discounts ranging from 15% to 40% to customers who choose to pay using their payment gateways.

The new dining options, under which restaurants must also pay fees in the range of 4% to 12% to implement Zomato and Swiggy’s payment gateways on their premises, were also criticized by the article. .

While rival fee gateway costs are 1-1.5%, restaurants will pay 4-12% over time in regions where there is no restaurant profit levy, it said. -we reported.

Weekly payments seem to be another level of competition between restaurateurs. High-volume restaurants risk having their money held hostage by food-tech companies for weeks, reducing the amount of cash available to them.

The NRAI also criticized the companies for the rivalry in which restaurants guarantee to give discounts to anyone who uses Zomato Pay or Swiggy Diner, even if the customer simply walked in after finding the location on the corresponding apps.

Zomato Gold comes full circle?

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The standoff is a tribute to a similar dispute that erupted in 2019. As Zomato established its Gold membership level in 2017, restaurants that grew tired of the model decided to “disconnect” from the project, effectively ending the dining option.

Under Zomato Gold, the food-tech participant connected a select group of restaurants offering deep discounts to “premium” customers expected to spend a lot. The promise of “premium” leads that would drive high-value transactions was used to attract restaurants.

However, NRAI claimed that the membership had been purchased by tens of millions of people, diminishing the “model value” of the restaurants.

The corporate body also claimed that Zomato Pay and Swiggy Diner were the two companies’ responses to reinvigorate “Zomato Gold” membership to “broaden the pie.”

He also criticized them for charging high transaction fees for deliveries, noting that both platforms had expanded into the restaurant market to increase revenue.

Zomato and rival Swiggy together control 90-95% of India’s food supply market, essentially making it a duopoly. According to Statista, the net meal procurement phase is expected to generate revenues of up to $12.14 billion in 2022 and $20.27 billion by 2027.

edited and proofread by nikita sharma


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