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News

8000-strong hotels body to shun Zomato Gold delivery

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NEW DELHI: After a boycott on dine-in, food delivery and search aggregator Zomato is now facing the heat on delivery.

The Indian Hotel and Restaurant Association (AHAR), which has 8,000 members nationally, said it is unanimously boycotting delivery services by aggregator Zomato under its Zomato Gold programme with immediate effect, over allegations of delivery from illegally-run kitchens, steep discounts offered for Zomato Gold members and unavailability of delivery executives.

The association president Santosh Shetty said, “We had clearly told Zomato that we are completely against the Zomato Gold delivery service scheme and asked them to scrap it. However, there has been no action by the food aggregator on the same.”

Zomato Gold on delivery offers members one free dish each time they place an order. Gold was extended to delivery by Zomato in September this year, amidst its stalemate with restaurants on dine-in services.

Launched in 2017 as a membership programme, Gold service has been opposed by the restaurant industry at large which has alleged it is hurting their profitability deeply.

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“We have not taken any decision on the Zomato Gold dining services, but we are completely against its delivery services. Our members which had taken their services will stop the same with immediate effect,” Shetty said on behalf of the association, which represents 8,000 members.

AHAR officials said there is no gain for hoteliers and it only benefits the food aggregator company.

The association demands include crapping of the ‘gold service’, servicing by only those restaurants which have legal mandatory licences, and an end to alleged arbitrary commissions charged by Zomato and steep discounts which it said were loss-making proposition for restaurants.

AHAR has alleged that delivery commissions charged by Zomato go up to 22-25% and asked for a cap of 15% including Goods and Services Tax, adding that the brunt of the increase has to be borne by the customer since the hotels and restaurants are being forced to increase prices.

Meanwhile, the National Restaurant Association of India’s (NRAI) stalemate with Zomato continues, with the association members continuing to be logged out of Zomato’s dine-in services.

On delivery, negotiations between the association and aggregators are still on, NRAI president Anurag Katriar said. “The association and aggregators are engaged in talks on multiple issues including Zomato Gold delivery,” Katriar said. The association has earlier said the extension of Gold to delivery is an “unacceptable proposition.”

On August 15, hundreds of restaurants led by the NRAI had logged out of multiple aggregator platforms including Zomato Gold and EazyDiner, over a series of allegations including deep discounting, data masking and uneven commissions. With the exception of Zomato, the restaurants have logged back with other aggregators.

Valued at $3.6 billion, Zomato has more than halved its cash burn and stayed focused on improving margins and lowering its cost of delivery, its strategic investor Info Edge said in an analysts’ call earlier this month. Other investors of Zomato include Ant Financial and Sequoia Capital.

While Zomato has since revised its Gold offerings to restrict discounts given to diners, restaurants say it is still unacceptable. Last month, commerce minister Piyush Goyal had asked the restaurant association to enlist its grievances against aggregator companies, including the issue of discounts.

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