Zomato, Swiggy discount progs against interest of restaurant owners: NRAI

The National Restaurant Association of India has written an advisory to its members against Zomato Pay and Swiggy Diner discount programmes saying these are against the interest of restaurant owners.

The advisory alleges that 'middlemen' Zomato and Swiggy are making money at the cost of restaurants, who sign up to be on the Zomato Pay and Swiggy Diner programmes by making them compulsorily offer discounts and also pay commission fee on every transaction on these platforms.

"Zomato Pay and Swiggy Diner both operate broadly on the same construct -- no cost/subscription fee to the customer to participate; restaurants must compulsorily offer a discount in the range of 15-40 per cent to be part of the program," NRAI wrote to its members.

Further, it said, "Restaurants must also compulsorily pay a commission in the range of 4-12 per cent on every transaction made via the respective payment gateway to Zomato or Swiggy", while competing payment gateway charges are 1-1.5 per cent only.

NRAI alleged that restaurants must offer the discount to "anyone who wishes to pay vide Zomato Pay or Swiggy Diner irrespective of the fact of whether the customer discovered the restaurant on Zomato/Swiggy or just walked in on his own" and the payouts are on a weekly basis.

"The fundamental question here is why should a restaurant pay a commission to a middle man to offer a discount to its own customer?" NRAI asked.

Zomato Pay is a payment service offered by Zomato through an electronic payment mechanism through which its customers can pay for an order to the merchant through the Zomato platform.

On the other hand, Swiggy Diner is an offering in the dine-in segment from Swiggy, that allows its customers to place dining out table reservations with offers for discounts.

When contacted, a Zomato spokesperson did not comment on the specific issues raised by NRAI but said, "With our new dining product, now live in Hyderabad for a few weeks with great results, we are confident that we will create tremendous value and growth for the industry."

The spokesperson further said, "We are looking forward to working with progressive restaurants who see the bigger picture."

Swiggy did not comment when reached out for its response.