Review one-sided contracts or face nationwide protest: FHRAI to Zomato, Swiggy

Three days after the National Restaurant Association of India (NRAI) kicked off a logout movement against food service aggregators (FSAs) like Swigyy, Zomato, the Federation of Hotel & Restaurant Associations of India (FHRAI) has written a letter to them asking to find solution to ongoing dispute brewing with restaurants partners or be ready to face nationwide protest.

In a letter to Zomato, Swiggy, Nearbuy, Dineout, EasyDiner and Magicpin, the FHRAI said that food aggregators are engaged in unethical business practices and need to review their contracts, which is termed as one-sided in favour of food aggregators.

As a technology partner, by merely hosting its members’ inventory, FSAs cannot hold sway and arm-twist the traditions and aspirations of millions of entrepreneurs in India, the letter further added.

Gurbaxish Singh Kohli, Vice President, FHRAI held deep discounting responsible for putting the hospitality industry in this awkward situation.

"A model contract which is mutually agreed upon has to be accepted. As such conduct is indicative of dominant behaviour and is indeed exploitative. Further, the agreement terms are not sacrosanct as they are frequently and unilaterally changed from time to time and always in favour of the FSAs. We are absolutely in favour of doing business, a business that is a win-win for everyone involved,” Kohli said in a statement.

The FHRAI also said that the unreasonably high commissions, payment terms and arbitrarily applied additional charges as well as unethical practices by the food aggregators.

"Commissions are not standard and customized to exploit the start-ups which are indicative of exploitative and dominant behaviour. Payment terms are not adhered to and are easily violated for the slightest excuse without recourse to any easy dispute resolution," said Somaraju, Treasurer, FHRAI.

FHRAI also alleged that food aggregators have disconnected restaurants from its customers by the number masking of customers.

"The food aggregators methods and practices are unbearable and require to be dealt with in the larger interest of the Hotel and Restaurant Industry,” added Kohli.

Restaurants have also complained about the imposition of FSAs’ absurd food acceptance, food preparation, food collection time with penalties and a negative grading system.

Meanwhile, requesting restaurant owners to stop the logout campaign, Zomato's CEO and founder, Deepinder Goyal, in a series of tweets called for a collaborative discussion with internet aggregators.

He also requested the restaurant industry to look for ways to reduce operating costs, so that eating out becomes more affordable for consumers. Acknowledging burden on restaurant partners, Goyal said that Zomato would be making modification in Zomato Gold and will do more for restaurant partners.

Earlier on last Friday, Gurugram-based food delivery major had in a letter asked its Zomato Gold partner restaurants to serve notice before discontinuing service.

A day before it, more than 300 restaurants in Gurugram in a protest against deep discounting pulled out from aggregators and table reservation services platforms such as Zomato, EazyDiner, Nearbuy, MagicPin and Gourmet Passport.

NRAI, which represents 500,000 restaurants in the country, had jointly participated in the logout movement and threatened to do the same in other cities including Delhi, Pune, Bengaluru and Mumbai.