Zomato calls for truce with restaurant owners

Amid an escalating face-off between restaurants and aggregators, the online food ordering platform Zomato has said it is open to rectifying its "mistakes" and appealed to restaurant owners to stop their logging out campaign.

As many as 1,200 restaurants in several major cities have reportedly delisted themselves from the dine-in programmes of online platforms over "unsustainable" deep discounting offered by the aggregators, saying the table reservation services were hurting their business models.

Zomato has lost 65 restaurants, which is 1 percent of the ‎restaurant partner base of its 'Zomato Gold' programme.

Zomato founder Deepinder Goyal, in a series of tweets, called for truce and sanity.

"I am sad that young entrepreneurs (much like me) in the restaurant industry are feeling the pressure to such an extent that they had to launch such a campaign. We set out to create a company that can create a massive impact on consumers, as well as business owners," he tweeted. "Somewhere, we have made mistakes and things haven't gone as planned. This is a wake-up call that we need to do 100x more for our restaurant partners than we have done before.‎"

Restaurants in Delhi, Mumbai, Bengaluru, Kolkata, Goa, Pune, Gurgaon and Vadodra exited platforms like Zomato, EazyDiner, Nearbuy, MagicPin and Gourmet Passport under a #Logout campaign.

"What's good for restaurants is good for Zomato. What's good for consumers is good for Zomato. Finding the right balance and product market fit is the restaurant industry's problem (and that includes us)," Goyal said.

Penning his series of tweets as "thoughts on the restaurant industry’s stand against deep discounting", he said: "Zomato Gold has been a major hit, but we understand that bargain hunters have also joined Zomato Gold and they are hurting some segments of the restaurant industry very badly."

At the heart of the dispute are the many schemes offered by food aggregator and reservation apps like Zomato, EazyDiner, and DineOut, ranging from 'one-plus-one-free' to 'all-you-can-eat' meals at a price fixed. However, restaurant owners say these deep discounts are becoming unfeasible and 'undervalue' their business.

Goyal said Zomato is committed to work with the industry.

"We are committed to work with the industry and make modifications to Zomato Gold which will result in a win-win situation for restaurants and consumers. Just like last year, when we changed some rules around Gold after hearing about the concerns of the restaurant community," he said.

He appealed to restaurant owners to stop the #Logout campaign.

"In the interest of consumers, we request restaurant owners, to stop the logout campaign, and have a collaborative discussion with internet aggregators for finding a sustainable way forward," he said.

Urging the restaurant industry to proactively look for ways to reduce operating costs, he said this was necessary "so that eating out becomes more affordable for consumers.''

"Our only objective here is to drive the growth of the restaurant industry," he said. "Take a look at this data - the avg price of a delivery order in India is just about the same as that of China. However, per capita income in China is 4.5x as that of India. It's important we bring down prices to find sustainable growth in the food sector in our country." ‎

National Restaurant Association of India (NRAI) President Rahul Singh had previously stated that the #Logout movement started in Gurgaon earlier this week has turned into a nationwide one, reflecting "how restaurants across the entire spectrum have been suffering from the deep-discount epidemic."