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Friday, Oct 18, 2019

Zomato Delivery Gold may be the next food fight

Zomato has not decided whether this will be available to its existing Gold members or will be offered as a separate programme to its customers. Its existing gold membership programme that is being opposed by restaurants lets customers avail special benefits on food and drinks.

business Updated: Aug 31, 2019 00:42 IST
Suneera Tandon
Suneera Tandon
Hindustan Times, New Delhi
Zomato confirmed the development and added that it will be rolling out the programme across cities.
Zomato confirmed the development and added that it will be rolling out the programme across cities.(Satyabrata Tripathy/HT Photo)
         

Zomato is pressing ahead with the launch of its Gold membership plan for food delivery, on similar lines to a now contentious programme that has pitted restaurants against food aggregators.

Zomato has not decided whether this will be available to its existing Gold members or will be offered as a separate programme to its customers. Its existing gold membership programme that is being opposed by restaurants lets customers avail special benefits on food and drinks.

The special offers and discounts that Zomato’s Gold members were entitled to were the reason that led many restaurants to log out of dine-in brands such as Zomato, Magicpin and EazyDiner. Restaurants claim the programme is squeezing their margins.

That Zomato is ready to roll out a new plan despite resistance from restaurants, indicates that the food aggregator is confident that it will be able to resolve issues that were at the heart of the conflict with its restaurant partners. Food delivery constitutes a major chunk of Zomato’s revenue.

Zomato confirmed the development and added that it will be rolling out the programme across cities. “There has been a long standing demand from our users to bring Gold to delivery, since delivery constitutes a large part of their engagement with us. We have been working on this and will be launching a programme soon across multiple cities,” a company spokesperson said. “We have utilised the recent time to secure valuable feedback from our restaurant partners to ensure the programme we launch is sustainable and aids the growth of the industry.”

Over the last few weeks, Zomato has been reaching out to existing restaurants on its platforms asking them to join Gold on delivery which will offer consumers benefits such as 1+1 on food orders (with the maximum discount capped at Rs300) and promises to boost loyalty among consumers, according to several restaurant owners who were approached by their local area managers to on-board the service. The offer does not apply to drinks and no other discounts can be clubbed with Gold.

However, it comes with several terms and conditions. The company will also be charging a one-time fee to on board restaurants on to Gold on delivery, albeit lower than what restaurants pay for Gold on dine-in. The maximum fee for on-boarding restaurants is Rs10,000 (including taxes). The fee could vary depending on cities.

While Zomato has maintained that demand for such a service is high in certain markets, not all are in agreement as they think such offers will again be a drain on their margins.

“As a principle I’m against discounting but this just squeezes my margins if I have to give and fund these discounts,” said a restaurant owner on the condition of anonymity. The restaurant has declined to join the programme when approached by Zomato recently.

A Bengaluru-based chain said that it has also not signed up for the programme. “We don’t want to participate at this point in time, because our kitchens are full, and we already have discount tie-ups with Zomato…and we also need to serve our own customers,” said the owner of a large quick-service restaurant (QSR) chain that was approached by Zomato to sign up for this.

In a meeting held with the National Restaurant Association of India (NRAI) on Thursday, representatives of Zomato told members of the restaurant association that the company plans to roll out Gold on delivery. Representatives of NRAI present at the meeting said they were informed by the company that plans to roll out Gold on delivery are still intact. “We advised them against it, but they have told us they are going ahead with it,” said a person present at the meeting.

People familiar with the company’s plans said that Zomato was targeting the launch of Gold on delivery in August itself. “We were told that they plan to roll this out by 15th August,” said a person familiar with the company’s plans for Gold on delivery. He said that the restaurants that were willing to join the programme had to upgrade their back-end.

Zomato’s move to launch Gold on delivery comes after the National Restaurant Association of India (NRAI) objected to the unfair terms by food aggregators as well as membership and dining platforms such as Zomato Gold (its dine-in offers program). NRAI has complained that such platforms are hurting business by offering steep discounts to lure diners.

What started with a few hundred restaurants logging out of platforms such as Zomato Gold, Dineout, EazyDiner on 15 August over deep discounts doled out by them has turned into a large scale protest with NRAI recently raising its displeasure with online delivery companies such as UberEats, Swiggy, Zomato and Foodpanda. Following this Zomato revised its Gold offerings to restrict discounts given to diners.

Last week, in a letter written by NRAI to these companies, the association listed out eight concerns. However, in a series of meetings on Thursday with the top executives from Zomato and Swiggy, NRAI said that some consensus was reached over drawing up of fair terms and conditions and even curbing discounts.

The aggregators are however yet to get back to NRAI with a formal plan to address these issues.

With additional inputs from Salman S.H.

First Published: Aug 31, 2019 00:42 IST

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