Restaurants Body Pushes Back Against Aggregators’ Dine-In Expansion
The association’s warning comes as India’s dine-in sector, one of the last segments under the Rs 5.7 lakh crore industry's control, faces increasing pressure to conform to aggregator-driven terms.
National Restaurant Association of India issued a cautionary advisory, warning its five lakh member restaurants about the growing disruption caused by food aggregators in the dine-in sector.
The association’s warning comes as India’s dine-in sector, one of the last segments under the Rs 5.7 lakh crore industry's control, faces increasing pressure to conform to aggregator-driven terms. The advisory compares the situation to the food delivery market, where deep discounting led to inflated menu pricing and entrenched customer expectations, ultimately eroding margins for restaurants.
The NRAI highlighted concerns over aggregator platforms extending their business model to dine-in services by bundling essential features like reservation systems with their payment gateways. The platforms lure customers with aggressive cashbacks and discounts, which are often partially or fully funded by the restaurants themselves, the advisory reads.
"Platforms earn a commission from restaurants on dining transactions despite adding no incremental value to the dine-in experience," the NRAI noted.
With commissions on payment gateway transactions ranging from 4% to 8%, restaurants are being forced to adopt these services under the guise of bundled offerings, the body said. The statement calls out this gateway charge while also pointing at cheaper alternatives that charge between 1% to 1.5% on such transactions.
The NRAI acknowledged the value of strategic discounts for driving traffic during lean hours or promoting new products. However, it criticized "deep discounting" as unsustainable and damaging. The practice, according to the association, manipulates consumer behaviour and distorts pricing, with smaller establishments bearing the brunt of the financial strain.
"Benefits of offering the discount must accrue to the entity bearing the cost of the discount - in this case, the restaurant - and not to a third party," it said.
Commenting on bundled offerings, Sagar Daryani, NRAI's President said, "Deep discounting may appear appealing in the short term, but they also pose long-term risks to restaurants' independence and viability, especially when mandatorily bundled with the aggregator’s payment gateway."
The advisory asked association members to use aggregator payment platforms only if payment gateway services are unbundled from the other services that the platform offers.
