Strategy Zomato wants to add more muscle to Gold with its new buffet offering, an all-you-can-eat (and drink) meal at partner outlets. While subscribers are pleased as Punch, restaurants have a furrowed brow, worried about soaring costs, execution nightmares, and a dilution of brand equity.
Zomato hopes to strike gold with its Infinity Dining scheme, but restaurants are apprehensive; courtesy of Zomato Gold has been a blockbuster for Zomato, with over a million active subscribers in India and abroad, and serving at more than 10,000 restaurants. All this in just about two years, and despite a blowback from some restaurants and customers because of its fine print.
Not surprisingly, the restaurant-discovery platform wants to add more muscle to Gold. For those who came in late, it’s a paid programme that offers complimentary food and drinks at select outlets.
Zomato’s new toothsome offering from the Gold stable is Infinity Dining, a no-restrictions, all-you-can-eat (and drink!) meal at partner restaurants. Subscribers, obviously, are gushing over it. While Zomato hopes it’ll be a giant leap for Gold, netting clients globally, restaurants are not overjoyed. Why?
Infinity Dining upends many rules of a traditional buffet.
- There is no set menu. In fact, the entire menu is up for grabs at a fixed price.
- There is no cap on the number of helpings (for 1.5 hours of dining and two hours of drinks).
- You can dine at a restaurant as many times as you want.
Now, here’s the value proposition Zomato pitched to restaurateurs. The platform buys a fixed number of covers (passes) at a restaurant to offer on Infinity Dining. Hence, the inventory for the all-you-can-eat ticket is fixed and in sync with how much the restaurant can handle. The idea is that a person can eat only so much, and the cover charge sufficiently takes care of the amount that gets consumed.
“Typically, in a buffet, the menu is pre-decided by the restaurant with a common spread of dishes for everyone. With Infinity Dining, diners have the option to choose as many dishes or drinks as they want from the entire menu,” says Gaurav Gupta, COO of Zomato. “The idea is not to just serve a meal but render an unforgettable experience, where they get to experience the restaurant in a way that’s never been done before.”
For the consumer, it works well. However, execution of the programme by restaurants would be a complex exercise, making them wary.
- All-you-can-eat meals needs special skills Restaurants serving such packages usually have all their back-end processes aligned towards producing buffet meals. A known example is Barbeque Nation, which optimises its processes to serve unlimited helpings. Applying the same concept to a la carte menu cannot work without a complete structural overhaul.
“A buffet works out only if you do just a buffet, like Barbeque Nation. Because that is what it is good at, it has all processes geared towards it. Buffets at five-star places are self-service, and they decide the menu. There is no choice above that. Then it works,” says Thomas Fenn, founder of Mahabelly, a premium south Indian
and seafood restaurant.
The cost structures of a buffet and a la carte are very different. When four people go with a table, they order a couple of appetisers and a couple of main courses, and the costs are workable. Now, all four would order eight appetisers and main courses. How will the cost structure work out?
“It is like a casino — the house always wins in an unlimited setup. First, the person can eat only limited stuff. Second, we put certain items with better margins, which doesn’t hurt us if certain people go crazy on high- value stuff. It is a value game,” says Fenn.
Essentially, the spread selected by the restaurant for an unlimited-type meal would have a healthy mix of high- margin and low-margin items.
“Even if I have 20-item unlimited buffet, a person cannot eat more than 600g. So even if one person eats 600g of prawns, which is very expensive, another person won’t, and it averages out,” Fenn explains.
- Reckless dining A plan like this also encourages irresponsible eating. When you do a la carte, the leftovers are usually parcelled. You can’t do that here, because that would mean people would order in excess to take back home, and make sure that the restaurant doesn’t earn.
A person may eat just two slices of a pizza, but the restaurant bakes and serves the whole pizza to the Infinity Dining customer. The leftover is wasted. If at a
table of four, four pizzas are ordered, the restaurant has to bake all four, with humungous wastage.
When it comes to drinks, the problem magnifies.
“Drinks in Infinity Dining mean inviting trouble, with the costing skyrocketing. If you get people to drink as much in 1.5 or 2 hours, they won’t drink responsibly. There will be fights. When you do a la carte, you have budget, and you pace your drinks as well. With Infinity Dining, they would want to get their money’s worth with a vengeance,” says Priyank Sukhija, managing director and CEO of First Fiddle Restaurants, which owns brands such as Lord of The Drinks, Tamasha, and Warehouse Café.
Restaurants do have events, such as ladies’ nights, where they offer unlimited drinks, but there’s a key difference. “You don’t have the time limit. You will be there for three to four hours, and behaviour towards alcohol changes. I would not want to take that chance at all,” says Sukhija.
On Zomato’s blog, the company says, “As you explore the menu and try out new dishes and drinks, do pace yourself. Ask about portion sizes before ordering to avoid wasting food (you know how obsessed we are at Zomato about Feeding India and not wasting food!). And watch those unlimited drinks, especially if you are driving. Besides, who needs a scene at a restaurant from imbibing one too many?”
It’s anybody’s guess if people would heed the advice.
- The premium-dining experience goes for a toss The restaurant community believes that Infinity Dining has not considered the effort that goes into the presentation and portioning. The programme says that though the servings are unlimited, the portions will be smaller. But those who run the kitchen believe it’s a simplistic assumption.
Take the example of a pizza. The kitchen processes would be aligned to bake a 12-inch pizza every time an order is placed. The chef cannot bake a single slice. Or take desserts, where presentation and aesthetics are vital. How do you make a smaller cheesecake or a smaller gulab jamun?
“Each restaurant plans its portions carefully, and gets specific utensils/crockery for it. Wok would be different everywhere. How will I get single serve plating for every item? How will I present two pieces of chicken tikka or a portion of a soup? My whole brand positioning goes,” says Rahul Singh, founder of The Beer Café and president of the National Restaurant Association of India.
- Operational nightmare; may give the brand a bad name Though unlimited, Zomato says that the food will be in small portions. However, that doesn’t alter the time taken to cook those items. How does the kitchen operate then? An Infinity Dining customer would want variety, and would keep ordering, but that would create chaos in the kitchen.
Usually, kitchens are designed to cater to a certain number of covers in a restaurant and have a limited number of chefs to serve that number of people. In a table of four, you get a maximum of eight dishes, including starters and mains. With Infinity Dining, you can get nearly six dishes per head. Even if they are mini portions, cooking and serving will take time. This will slow down service, giving the restaurant a bad name.
“Kitty parties on weekdays don’t hurt you because services are lean. But in mid-weekend, operations-wise, you are not geared towards doing such single service with the same resources” Fenn says. And the opportunity cost is very high. You could be earning INR1,500-1,600 per customer, but for a minimal addition in footfall and providing the same excellent food and service, you get INR650.”
A la carte menu has nearly 120-200 dishes on offer, and opening up all of them for unlimited services is not viable. The solution might work for a small dhaba or a restaurant with a limited menu, as their resources would not be spread across a large range of dishes.
- Pricing power lies elsewhere Another bone of contention is that Zomato is currently dictating the pricing of Infinity Dining packages.
“They have a CFT (cost for two) metric. This is something the restaurant tells Zomato, and Zomato checks the menu with starters, main course, desserts, etc., to come at the average spend. Restaurants tend to depress it a bit, so as not appear too expensive. It is a pricing strategy. If you use this metric for an unlimited
menu, it doesn’t work out,” says Fenn.
They haven’t given a pricing control because they think the restaurant will price too high and nobody will buy, he adds.
With the pricing power firmly resting with Zomato, it can also sell the covers cheaper than planned if the inventory is not selling. This will end up tarnishing the brand, the restaurants believe, as it will no longer appear premium.
“You depressed your bottom line, you opened your restaurant to a class of people you wouldn’t want to otherwise, like deal hunters. There is pressure on processes for a lower payout, and in the long term, your brand is affected — from premium a-la-carte to a buffet one,” Fenn explains.
Even after restaurants take this hit, it is the platform that wins, as the customers will always associate the feature with Zomato, and never the outlet.
Can tweaks make adoption better? In this whole arrangement, the restaurateurs have been apprehensive because of their previous experience with Gold.
Zomato has traditionally tried to make money from restaurants (by helping to improve the restaurant’s discoverability), instead of charging customers. Gold was its first attempt at trying to build a revenue stream from consumers. The 1+1 programme was an instant hit with consumers, but soon after, complaints from
restaurants started pouring in.
The initial proposition (of the increase in footfall during lean periods offsetting the cost of giving 1+1) did not often hold, and soon enough, restrictions such as Gold membership use-per person and number of helpings were introduced.
“When they pitched Gold, it was a premium membership programme for select customers and restaurants. Six months later, it was dining made affordable to everyone, which is very different,” says Singh. “They said it will bring customers who don’t care about discounts, and the bill will be large enough, but this is not true.”
Becoming a Gold member doesn’t cost much, so it brings deal hunters with no loyalty, he adds, pointing out that Infinity Dining is setting itself up to be the same.
Though Zomato Gold is optional, Singh believes that a restaurant is forced to be on the programme as many consumers are addicted to it.
There have been a few brainstorming sessions between Zomato and the restaurateurs to make Infinity Dining work for everyone. Some of the suggestions include limiting the number of dishes that would be made unlimited; having specific Infinity Dining time slots so that the restaurant can optimise its people resources at that time; and also give pricing power to the restaurant owner.
“We also asked them for premium Infinity Dining for known restaurants. A premium dining place sitting on a
higher rental cannot be on the same programme as a neighbourhood hangout,” says Sukhija.
However, such changes can prove detrimental to how Gold members perceive Infinity Dining, making it difficult to convert prospective Zomato users to Gold members.
If the service is limited to two, or the person can order only once he finishes two items, the charm of an all-you- can-eat meal wears off. There’s no incentive for the customer to opt for Infinity Dining because he is now able to order the same amount that he would if he goes a la carte, and that too on a restricted menu, for the same cost. The customer will feel cheated then.
“One main course is 150g-170g. A person can eat 400g at max. How many dishes can you actually eat then? You are gaming the system saying you can eat anything,” Singh says.
Despite the flaws, the programme has managed to onboard more than 500 restaurants across three cities, but many of the known brands are staying away.
“Let’s say I have a restaurant which has a fixed cost of INR10 lakh. As my sales increase, the food cost is the only increase, based on consumption. Now if my sale is INR9 lakh, I have to make INR10 lakh to cover at least the fixed cost. I believe restaurants that are on this brink would be coming on this programme to get the business going,” says Fenn.
The bottom line
The restaurants have to be protected, Rocky Mohan, founder of food-deals app Gourmet Passport, says. “They are the goose the lays the golden eggs. If you kill them there, there is no business left. Aggregators are taking stuff away from them, and restaurants are bleeding because they can’t afford to not be on them. It costs crores to set up a restaurant, but it is completely exploited.”
It’s still early days, even with the tepid adoption. Zomato is bullish on onboarding new restaurants, and Gupta of Zomato says that he wants to take it to more cities, and even international markets. But in its current shape, it will be tough to convince restaurants that they would benefit by being on Infinity Dining.
“A programme has to drive traffic when they are not full, or make people spend more money. But this makes them spend less money, might bring them often, but the value of the cheque goes down. Unless it brings them back significantly often, it won’t pay back,” says Samir Kuckreja, founder of Tasanaya Hospitality, a consulting firm.
There’s a lot on Zomato’s plate at the moment.
