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India's restaurants are rebelling against food delivery apps

MUMBAI, India – Aakanksha Porwal the owner of a small retro dinner called Vahnilla & Co mpany recently registered for Zomato food delivery app making dishes like her veggie cheeseburgers and Kit Kat caches available to a wider audience. She also joined the Zomatos Gold program, where she would offer two dishes at a cost to one to members who ca could eat me personally.

The goal was to help expand the startup business. But three months and 150 free dishes later, Porwal has become disillusioned.

The free food has cost her about 20 percent of her income, on top of a Zomato Gold registration fee of around $ 550, she said. Gold users, who pay around $ 14 for a year of buying one-to-one-for-free at 6,000 restaurants, are often rude and demand extra discounts, she added. And Vahnilla pays Zomato a steep 28 percent commission for every order delivered.

"Zomato is the biggest thing that has happened to a customer," Porwal said. "The concern of restaurant owners is literally nothing."

Now, in a collective primal scream, India's restaurants are revolting against Zomato and other leading serving apps .

Two weeks ago, a group of restaurant owners near New Delhi called for the end of the steep food discounts offered by Zomato and competitors such as Swiggy and Uber Eats. They claimed that the costs fell on dining while the apps reaped the benefits. The protest, which has drawn public support from thousands of eateries, has its own hashtag, #Logout. Many have either left the Gold program or promised to do so.

"The consumer believes that a discount has been his right, not a privilege," said the leader of the uprising, Rahul Singh, the CEO of the Beer Café restaurant chain and president of the India's National Restaurant Association. "But all this comes out of the pockets of the restaurants."

The frustration goes beyond India. With food ordering and delivery constantly moving online, restaurant companies and delivery workers around the world are still questioning the small percentage of pie they receive from powerful concierges such as Zomato in India, Grubhub and DoorDash in the US, and Deliveroo in Europe.

The apps have made it easier for people to order takeaway meals, and restaurants have been exposed to a larger audience of eateries. But the platforms also require hefty commissions for each order and can push the profit margins of culinary businesses. In the US, some restaurants have closed and are unable to keep track of the costs of working with the delivery apps.

The insurgency in India underlines how tense the relationship between restaurants and serving apps has become. On Thursday, restaurateurs spent all day meeting top executives in Zomato and Swiggy, but failed to settle their differences.

"The customer is addicted now," Satish Meena, a senior forecasting analyst at the New Delhi office of Forrester, a global technology research firm, said of the apps. "They have trained the customer that if there is no discount today, I will wait because tomorrow there will be another discount."

The Indian food delivery apps said that they provided a valuable and costly service that was underestimated by their restaurant partners. But they also make some changes to the rebellion.

Just after the # Logout campaign began, Zomato's top manager, Deepinder Goyal confirmed on Twitter for the financial pain that "bargain hunters" had caused some restaurants. Last week he emailed all Gold restaurants notifying 10 changes in response to their concerns, including a once-a-day limit and a doubling of the annual subscription price to about $ 25. [19659002] But he refused to quit the program. On the contrary: In an interview last Friday, Mr. Goyal said he intended to extend Zomato Gold for delivery. Around 18,000 restaurants had already signed up, he said, and Zomato would soon test the idea with a small group of customers.

He argued that for many restaurants, the extra foot traffic from Gold was an important source of business.

"Ninety percent of the restaurant base says, how can you get me more customers?" Said Goyal. “At the end of the day, it's the restaurant's choice. Who forces you to join gold? "

Mr. Goyal said he understood why some restaurant owners felt that Zomato's delivery mission was unfair. But he noted that the cost of Zomato to process and deliver an order was about 65 rupees, or 91 cents, while the average order size in India was 235 rupees, or $ 3.27.

"We lose seven rupees on order," he said.

That logic gives little sympathy from restaurateurs, who cope with a general economic downturn and higher prices of fruits and vegetables in places like Mumbai. [19659002] The restaurant owners said that Zomato and Swiggy, who have raised nearly $ 2 billion in funding, had decided to push discounts above all else.

The home screens of both apps provide top billing to which restaurants – usually big chains like Burger King or Domino's Pizza – offer the biggest deals that day.

"Sometimes with all discounts, it is cheaper for the customer to order online than to cook at home," said Anurag Katriar, who runs a group of European-style restaurants under the Indigo brand and heads the Mumbai chapter of the restaurant association. "For aggregators, the number of users and clicks builds the value."

Another tender point is customer data. Neither Zomato nor Swiggy share customers' names and phone numbers with the order-filling restaurant, citing privacy concerns. Restaurant owners said it had no way to market directly or build long-term relationships with its best customers.

Zomato and Swiggy also continue to create campaigns and programs to give app users value – often at the expense of restaurants.

Zomato recently registered around 250 restaurants in an experiment called Infinity, where people could eat as much as they wanted from the restaurant's entire menu for a set price. The subsequent gluttony was difficult for restaurants to manage and resulted in a lot of wasted food. Goyal said Zomato now planned to limit the unlimited serving to selected items such as pancakes or dosas.

Swiggy, who is completely focused on delivery, begins to compete directly with restaurant partners through their own brands, which cook in special, supplying only " shy kitchens." The restaurant industry has asked India's antitrust regulators to block internal brands. Swiggy declined to comment on the matter.

The frustrations came to a head on August 13, just before India's Independence Day.

About 300 restaurant owners in Gurugram, a New Delhi suburb that is home to many technology companies, including Zomato, decided they were tired of losing money to Zomato Gold's patrons. They made a pact to withdraw from Gold and other discount programs for a few days, saying they wanted to " eliminate consumers from discount addiction ."

The news of the protest went viral. In just a few days, more than 2,000 restaurants closed – from white-cloth establishments to dosa stores in the neighborhood. This week, the industry asked for further changes to the food delivery programs run by the major players, including Uber Eats.

During meetings Thursday to discuss these requests, Swiggy said it would limit the frequency of discounts and look at ways to share costs, according to Mr. Katriar, the head of the Mumbai restaurant association, who attended. But Zomato hinted that it would continue with Mr. Goyal's plan to expand gold for delivery, which could further damage the restaurant's economy.

A spokesman for Swiggy said the meeting had been "constructive and collaborative." A Zomato spokeswoman did not respond to requests for comment

The protests have left Zomato struggling to find the right balance between competing customer sets: the 1.2 million paying gold users and the thousands of restaurants it needs to make the program valuable .

"Gold has become a super-duper success, and that's been the problem," Goyal said. "Maybe 1 percent is abusing gold, but that's not the norm."

A typical gold user is Anushka Jankar, who dined at Vahnilla on a recent Tuesday afternoon with two friends. She said it was her first time there and that she had discovered the place through the app.

Ms. However, Jankar said that gold did not dominate her eating choices. "I eat a lot and I'm a big foodie," she said. "Basically, I use it when the end of the month and my bank balance is low."

The program also works better for some restaurants than others.

Rudresh Agarwal, co-owner of Carpe Diem, a bar and shisha lounge in Kolkata, eastern India, said he lost some money on gold items, but viewed the program as a way to get exposure. He said he could afford the losses because he served on liquor and shisha, or water pipes, which his restaurant served.

However, for a place that only offers food, the Gold discounts can be devastating. "If you don't have other products, the costs won't work," he said.

MRS. Porwal said she was sticking to the Gold program for now. She said she was grateful that other restaurateurs had pushed Zomato to improve the program, and would like to see how the changes, which take effect in a few weeks, play out.

Mr. Goyal said Zomato would continue to listen to the restaurants, although they did not always see eye to eye.

"We know that as the industry grows, Zomato grows together," he said.

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