Restaurants body cautions members of aggregator disruption in dine-in space

New Delhi: The National Restaurant Association of India (NRAI) on Sunday cautioned its 500,000-plus restaurant members on what it termed "dangers" of deep discounting on dining-in, monopolising of payment gateways and data control by aggregators such as Swiggy and Zomato. "Deep discounting has caused significant challenges in food delivery; NRAI warns that similar tactics are being employed to capture the dine-in market," the NRAI said in a detailed advisory, a copy of which was seen by ET.

The development could escalate multiple long-standing disputes between India's ₹5.69 lakh crore restaurant sector and food delivery aggregators, which have been clocking healthy growth year-on-year on the back of consumer convenience and last-mile discoverability. Matters of dispute between the two, including allegations by the NRAI of deep discounting, data masking and uneven commissions by the aggregator platforms on deliveries, are currently being examined by the Competition Commission of India (CCI).

For table bookings made by customers on aggregator platforms, most restaurants need to pay 4-8% commissions to the latter, which are higher than the 1-1.5% charged by third-party payment gateways, according to the advisory. According to the NRAI, aggregator payment gateways push aggressive discounts and cashbacks to acquire customers, which, it alleged, are at the expense of the restaurants. Third-party gateways include Paytm and BharatPe.

Swiggy and Zomato declined to comment on the development.

"Deep discounting may appear appealing in the short term, but it also poses long-term risks to restaurants' independence and viability, especially when mandatorily bundled with the aggregator's payment gateway," Sagar Daryani, president of the NRAI, said. He added that the practice particularly affects small, independent enterprises, making it harder for them to compete and survive in the long run.

The industry body said it "encourages the restaurant community to exercise caution and sound judgment before deciding to participate in dine-in programmes by aggregators, while urging aggregators to unbundle the payment gateways and reservations". Last month, the NRAI had said in a statement that the aggregator platforms were using customer data to push demand for their private labels and cloud kitchen brands they own such as Swiggy Daily and Zomato Everyday.

Daryani said the industry has been "consistently raising the issue of anti-competitive and predatory practices" of food delivery aggregators, adding that the online business is an extremely important tool to grow the overall size of the industry. "Lately, we fear that they (food delivery platforms) have been using our order data to aggregate demand for their labels and curated services such as Zomato Everyday and Swiggy Daily," he said.