If something is too good to be true, it probably is.
Restaurants in Gurgaon have pulled out of loyalty programs like Zomato Gold, Dineout, EazyDiner, Nearbuy and MagicPin, which offered deep discounts for dine in customers. Zomato Gold, for instance, offered customers one dish free with another, or two drinks free with two drinks, and Dineout offered significant discounts as well. Restaurant owners now say that they find that these offers to be financially unsustainable.
“NRAI’s Gurgaon chapter has come together in the #logout movement to give Gurgaon freedom from aggregators who have distorted a vibrant marketplace by aggressive discounting and predatory pricing,” said the National Restaurant Association of India, which is a pan-India restaurant body and claims to represent 300 restaurants in Gurgaon. “Restaurants have already suffered due to increasing rentals, and denial of input tax credit. The situation is now aggravated through the anytime anywhere any day discounting behavior. The restaurateurs have therefore come together to detox consumers from discount addiction. It will have some withdrawal symptoms for a short term, but one has to see a healthier lifetime cycle.”
Zomato, for its part, has sought to play down the strike. “We do not see any impact on our Gold subscribers due to the #Logout campaign. Most restaurant owners in these cities are in touch with us and are not planning to join this campaign. We are told that #Logout is being instigated by a few restaurant owners and is not the voice of the restaurant industry at large. For the industry, Zomato Gold has been a key business driver for the last 18 months and they don’t want to be driven by interests of a few restaurant owners,” a company spokesperson said.
Restaurateurs though claim that the movement might not remain restricted to Gurgaon — Rahul Singh, President of the NRAI said that restaurants in other cities could soon join in. He added that the dine-in industry was getting endangered by such deep discounting, and restaurants were forced to fund the discounts themselves. “When you have anytime, anywhere discounts you are basically distorting the system,” he added. “Five years back you could see reviews and recommendations on these search and reservation platforms–today it is just about offers.”
The offers were meant to entice people to eat out more — services like Zomato Gold essentially halved most bills when two people ate out at restaurants — but it appears that the increased volumes aren’t quite making up for the discounts that these restaurants were forced to offer. Restaurateurs now find themselves in a Catch 22 situation — if they don’t sign up for Zomato Gold, they see their customer numbers fall because people end up going to restaurants which do offer services like Zomato Gold; if they do sign up for Zomato Gold, the halved bills make it hard for their restaurants to make any money.
Restaurants, thus, have banded together and done what was perhaps the best for the industry — they’ve gone off Zomato Gold en masse. This means that if someone in Gurgaon needs to eat out, they won’t be able to avail discounts anywhere, which might force people to pay regular prices. The restaurants realize that the move might mean decreased footfalls, but they feel that the limited visits they garner will at least be profitable. Services like Zomato Gold and Dineout had sought connect customers and restaurants and benefit both, but that doesn’t appear to have happened — while customers have never had it better while eating out, some restaurants have been left with a sour taste in their mouth.