Food apps to rejig their consumer offers: National Restaurant Association of India

The National Restaurant Association of India (NRAI), in its meetings over the last two days with all the restaurant and food service aggregators (FSAs), has learnt that FSAs resorted to unfair business practices in order to compete with each other's offerings in the market.

Post the meetings, it has been decided that all aggregators will rejig their features that will allow the restaurant-customer ecosystem to reduce deep-discounts, the restaurant body said in a statement on Tuesday.

Rahul Singh, president, NRAI, said that restaurant body was bemused to know that the aggregators were promoting deep-discounts to stay competitive among each other. "While one aggregator gave 1+1, the other had to adopt a 50% discount scheme in order to stay relevant. And what hurts the most is, that these deep-discounts are funded by the restaurant industry and not the aggregators. Moreover, as opposed to general perception, restaurants do not get any share of the proceeds that aggregators generate from guests as subscription fees," said Singh, who is also the founder and chief executive officer of The Beer Café.

The Federation of Hotel & Restaurant Associations of India (FHRAI), has also put together a six-point action plan to take it up with the FSAs for their "unfair" business conduct. The top issues of concern include consulting industry associations, profitability, unfair customer appeasement practices, deliberate policing, competing with each other and legal and taxation aspects.

Gurbaxish Singh Kohli, vice-president, FHRAI, said in its letter marked to the founders and chief executive officers of the online food delivery firms, the association has submitted a list of issues but is yet to hear from them.

"We believe that the role of industry associations has been deliberately kept limited, leading to a one-way communication, leaving no opportunity for the industry to have a conflict management mechanism in place. With regards to the eroding profits, unlike e-commerce companies, restaurants don't have a continuous inflow of foreign direct investment and access to funds. Any strategies adopted by the FSAs for their profits should directly benefit the restaurant industry too," said Kohli.

The apex hospitality body has also sought inputs from its regional associations viz. HRANI, HRAWI, HRAEI and SIHRA as well as other affiliated associations for coming up with a comprehensive report to sort out matters related to FSAs that are affecting the industry.