FDI startups

Piyush Goyal likely to meet NRAI to resolve ongoing tussle between Zomato and restaurants

FDI startups

Online food delivery major Zomato, thousands of restaurants across the country and their representing body National Restaurant Association of India (NRAI), have been up in arms for the past few months over deep discounting.

The Gurugram-based company has been facing continuous backlash from restaurant partners, who are hurt by this predatory pricing exercise. Vehement protests, including #logout movement by restaurants and NRAI, have been ongoing.

Taking the cognizance of the matter, Commerce Minister Piyush Goyal has now taken the matter in his hands and has asked NRAI to enlist all the grievances against the foodtech companies which are adversely affecting their business.

The ministry is highly concerned with the deep discounting being offered by e-commerce players that are hurting small businesses, restaurants being one of them, said Goyal to ET.

Goyal has clearly stated that no online companies can illegally adhere to deep discounting to make profits. If anyone found doing so, strict action would be taken against the firm.

The association has submitted its grievance letter on Monday to the ministry, which includes major issues including deep discounting, high commissions, arbitrary condition, private labels that need immediate attention on food delivery firms.

This is not the first time Goyal agreed to look into the matter. Three months ago, he suggested that restaurateurs and food aggregators sort the issues among themselves and he can intervene if they want.

According to NRAI and restaurants, deep discounting ranging from 30% to 70% are being deployed 365 days of the year on delivery platforms, which has distorted the market entirely. These discounts are neither sustainable nor beneficial to the industry.

Two months back, over 1,000 restaurants from across the country had decided to pull out of membership and restaurant reservation apps over the concerns as mentioned above and had triggered a logout movement which was led by NRAI.

The movement has recently received support from the apex restaurant industry group, Federation of Hotel and Restaurant Association of India (FHRAI).

Adding fuel to the fire, Zomato had extended its membership program Zomato Gold for home delivery, which has been at the center of restaurants partner’s logout movement.

However deeming the allegations baseless, Zomato’s founder Deepinder Goyal has claimed that many restaurants which had left are now back on Gold. The platform claimed to record 1.6 times the peak number of Gold subscriptions sold last week. According to Zomato, these developments are nothing but propaganda by the restaurant bodies.

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