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India's restaurants are rebelling against food delivery apps

MUMBAI, India – Aakanksha Porwal Owner of a small retro-style restaurant called Vahnilla & Co mpany The recent Zomato app for food delivery was registered to make dishes such as their vegetarian cheeseburger and Kit Kat Cakesicles available to a wider audience. She also participated in Zomato's Gold Program, offering two meals for members who personally invited me to dinner for the price of one.

The goal was to expand their emerging business. But three months later and 150 free dishes later, Ms. Porwal is disillusioned.

Free food has cost her about 20 percent of her revenue, in addition to a Zomato Gold sign-up fee of approximately $ 550, she said. Gold users who shop for $ 14 a year in 6,000 restaurants are often rude and demand extra discounts, she added. And Vahnilla pays Zomato a high commission of 28 percent for every order.

"Zomato is the best thing that can happen to a customer," said Ms. Porwal. "The consideration of restaurant owners is literally nothing."

Now, India's restaurants are rebeling in a collective primal scream against Zomato and other leading food apps .

Two weeks ago, a group of restaurant owners near New Delhi called for an end to the steep food discounts that Zomato and competitors such as Swiggy and Uber Eats are constantly offering. They argued that the cost of restaurants declined while the apps took the rewards. The protest, which has been publicly supported by thousands of restaurants, has its own hashtag #Logout. Many have either abandoned or committed to the gold program.

"The consumer believes that a discount was his right and not a privilege," said the leader of the insurgency, Rahul Singh, the executive director of The Beer Café restaurant chain and the president of the Indian National Restaurant Association. "But it all comes from the bag of the restaurant."

Apps have made it easier for people to order takeaway food, and restaurants have become accessible to a wider audience. However, the platforms also charge high commissions for each order and can reduce the profit margin of culinary facilities. In the US, some restaurants closed because they could not keep up with the cost of delivering apps.

The insurgency in India underscores how strained the relationship between restaurants and food apps has become. On Thursday, the restaurateurs met the top managers of Zomato and Swiggy all day, but could not settle their differences.

"The customer is now addicted," said Satish Meena, senior forecast analyst at the New Delhi Office of Forrester, a Global Tech Research Company, said of the apps. "They have taught the customer that if there is no discount today, I will wait because there will be another discount tomorrow." , But they are also making some changes in the face of rebellion.

Shortly after the beginning of the #logout campaign, Zomato's CEO, Deepinder Goyal apologized on Twitter for the financial woes that had caused "bargain hunters" in some restaurants. Last week he emailed all Gold restaurants, announcing 10 changes in response to their concerns, including a daily limit and a doubling of the annual subscription price to approximately $ 25.

] But he refused to finish the program. On the contrary, in an interview last Friday, Mr Goyal said he intends to extend Zomato Gold to delivery. Some 18,000 restaurants have already registered, and Zomato will soon be testing the idea with a small group of customers.

He argued that for many restaurants, the extra foot traffic of gold was an important source of business.

"Ninety percent of the restaurant base say, how can you bring me more customers?" Mr Goyal said. "At the end of the day, the restaurant has a choice, who forces you to be on gold?"

Mr. Goyal said he understands why some restaurant owners considered Zomato delivery fees unfair, but noted that the restaurant was not a bargain The cost of processing and delivering an order at Zomato was about Rs. 65 or 91 cents, while the average order size in India was Rs. 235 or $ 3.27.

"We lose Rs. 7 per order," he said

This logic is met with little sympathy by restaurateurs who are coping with a general economic slowdown and higher prices for fruits and vegetables in places like Mumbai. [19659002] The restaurant owners said that Zomato and Swiggy, which together make up nearly 2 billion Having collected dollars, decided to raise discounts on anything else or Domino's Pizza – offer the biggest deals on this day. "Sometimes it is at all discounts for To order customers cheaper to order online than to cook at home, "said Anurag Katriar, who maintains a group of European-style restaurants the Indigo brand and heads the Mumbai chapter of the restaurant association. "For the aggregators, it's the number of users and clicks that make up their value."

Another sore point is customer data. Neither Zomato nor Swiggy notify the restaurant that processes the order the names and phone numbers of the customers, citing privacy concerns. Restaurant owners said they had no way to market directly or build long-term relationships with their best customers.

Zomato and Swiggy continue to cook promotions and programs to add value to app users, often at the expense of the restaurants.

Zomato has recently logged in about 250 restaurants for an experiment called Infinity, where people could eat as much as they wanted at a flat rate. The resulting gluttony was difficult for restaurants to handle and resulted in a lot of wasted food. Mr. Goyal said Zomato plans to limit the unlimited range of food to select products such as pancakes or dosas.

Swiggy, which focuses exclusively on delivery, begins with its own brands that make food special, to compete directly with restaurant partners, supplying only " Cloud Kitchens." The restaurant industry has urged India's antitrust authorities to block the in-house brands. Swiggy declined to comment.

The frustrations came to a head on August 13, just before India's Independence Day.

About 300 restaurant owners in Gurugram, a suburb of New Delhi where many technology companies are based. Including Zomato, they were tired of losing money to Zomato Gold customers. They concluded a pact to cancel gold and other rebate programs for a few days, saying they wanted to "detox consumers of rebate dependence ."

The news of the protest became viral. Within days, more than 2,000 restaurants joined in, from white tablecloths to neighborhood stores. This week, the industry called for additional changes to key food delivery programs, including Uber Eats.

During meetings To discuss these requests, Swiggy said on Thursday it would limit the frequency of discounts and look for ways to share the costs, according to Katriar, the head of the Mumbai restaurant association, who was present. However, Zomato announced plans to expand Mr. Goyal's plan to extend gold to deliveries, which could further damage restaurant finances.

A spokesman for Swiggy said the meeting was "constructive and collaborative." A spokeswoman for Zomato did not respond to commentary requests

Zomato's protests sought to strike the right balance between its rival clientele: the 1.2 million paying gold users and the thousands of restaurants it needs to make the program worthwhile ,

"Gold was a super-super success, and that was the problem," Goyal said. "Maybe there are 1 percent who abuse gold, but that's not the norm."

A typical gold user is Anushka Jankar, who had dinner with two friends at Vahnilla one Tuesday afternoon. She said that it was her first time there and that she had discovered the place through the app.

wife. Jankar said gold has not dominated their dining options. "I eat a lot and I'm a great foodie," she said. "I basically use it when it's the end of the month and my balance is low."

The program works better in some restaurants than in others.

Rudresh Agarwal, co-owner of Carpe Diem, a bar and shisha lounge in Kolkata, eastern India, said he had lost some gold to Gold guests, but saw the program as a way to gain fame. He said he could afford the losses because he benefited from the drinks and water pipes his restaurant offered.

For a food-only place, the gold rebates could be devastating. "If you have no other products, the costs will not work," he said.

wife. Porwal said she was sticking to the gold program for the time being. She said she was grateful that other restaurateurs had urged Zomato to improve the program and wanted to see how the changes, which would take effect in a few weeks, had an impact.

Mr. Goyal said Zomato would continue to listen to the restaurants, even though they did not always see eye to eye.

"We know that Zomato always grows with the industry growing," he said.

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