There have reportedly been 900 restaurants deleted from Swiggy Dineout in the past two weeks since the National Restaurants Association of India (NRAI) instructed its members to log out of the site. According to NRAI, one of the restaurants’ main lines of business would be harmed by the food aggregator’s habit of giving steep discounts.
Some upmarket eateries in Delhi-NCR that have departed Swiggy Dineout include Cafe Delhi Heights, Smoke House Deli, Social, The Beer Cafe, and Mamagoto, as well as food and hospitality companies like Indigo Hospitality, Impresario Entertainment & Hospitality, and Simmering Foods and Restaurants.
Online meal delivery service Swiggy, located in Bengaluru, said this month that Dineout, a ten-year-old business it purchased from its former owner Times Internet in May 2022 in a $200 million transaction, had been integrated with its primary app on both Android and iOS. While Swiggy focuses mostly on meal delivery, Dineout gives users discounts at restaurants where they dine.
Dineout provides a reduction on restaurant bills of up to 40%. Swiggy Dineout customers receive significant discounts on their food-related costs. According to the NRAI, restaurant partners featured on Dineout were instructed to voluntarily switch to Swiggy’s new dining platform Swiggy Diners (which is being renamed from Dineout).
Dineout provides information on customer reviews, business hours, location, and other topics in addition to savings. Additionally, it shows menus and enables table reservations. The NRAI claims that the dine-in industry is now quite successful and that, if food aggregators succeed in entering it, the margins for restaurants would suffer because of the rising cost of aggregators’ discounts and commissions.
Dineout’s aggressive discounting tactics, according to the NRAI, which represents more than 500,000 restaurants nationwide, disrupt the restaurants‘ primary dine-in business and spread a “destructive culture of discounting that will be permanent.” According to the group, aggregator platforms give savings of up to 40% on every meal bill paid through the platform’s gateway, leaving shockingly low margins for eateries.
Why are Zomato and Swiggy the target of complaints?
Zomato and Swiggy, two unicorns in the food market, have become the target of growing discontent. With their discounts, commissions, dine-in programs, consumer complaints, and data sharing over the years, these two food aggregators have raised worry within the restaurant industry. The NRAI has aggressively opposed several of Zomato’s and Swiggy’s practices.
The company has already run a campaign against the dine-in features provided by food tech businesses. The NRAI started the #Logout Campaign against Zomato Gold in 2019. At the time, Zomato Gold’s high commission rates for restaurant reservations and its generous membership discounts were the cause.
Shortly after, Zomato ended its Gold program. But it just announced its new Zomato Pay service. According to NRAI, even with cashback and significant reductions (up to 30% off the total bill value plus bank savings), the dine-in business through food tech is not profitable for restaurants. Additionally, the food tech aggregators want these cafés and restaurants to pay a fee of 4–10%.
The firm will be in trouble if restaurants stop using Swiggy Dineout since, according to the NRAI, over 400 brands and more than 900 eating establishments in 13 cities throughout the nation have delisted Swiggy in the past two weeks. According to the trade group, another 2,000 stores are likely to follow.
Given that Swiggy has over 15,000 restaurants and cafés on Dineout, the company’s revenue may be impacted by premium brands and outlets leaving amid mounting losses; in FY21, Swiggy recorded a loss of Rs. 1,165 crores. The business spends money on marketing initiatives to sign up more and more restaurants even if it is not profitable. The widespread restaurant log-out effort is expected to put Swiggy Dineout in a pickle and pose a risk to one of the main development drivers for the food tech platform.
Following reports that several upscale eateries with multiple locations in Delhi-NCR had delisted from Swiggy Dineout due to concerns about steep discounts, reliable industry sources told a news agency on Thursday that the majority of those cafes and restaurants had also removed themselves from other online food delivery platforms like Zomato.
According to a Swiggy spokeswoman, Swiggy Dineout collaborates with over 15,000 restaurant partners on the platform in more than 20 locations, and it regularly communicates with them to enhance its services and make this collaboration profitable for both parties. One of those businesses alone has approximately 250 eating locations, according to sources who told the agency that only 20 brands with roughly 400 outlets have delisted from Swiggy Dineout.
According to the spokesman, “Restaurant partners on Swiggy Dineout have entire flexibility to decide on how much discount they desire to provide to clients through their listing on the app.” Only a small number of restaurant partners have expressed a wish to delist from the platform, although thousands of partners continue to sign up with us and list on Swiggy Dineout each month. The meal delivery service informed the news agency, “We continue to interact with our restaurant partners and NRAI officials to review their selections.
edited and proofread by nikita sharma
