On 16 February, Zomato sent an email to the restaurants listed on its platform. It concerned changes in its order cancellation policy and came out of the blue—unsolicited and unilateral.
The revised policy—which will go into effect on 24 February 2020—caps compensation for restaurants in the event of order cancellations by customers based on various conditions. Conditions such as whether the order is already marked as ready for pick-up or how much of the estimated delivery time has passed.
According to a copy of the email accessed by The Ken, if the order isn’t marked ‘ready’ at the time of cancellation, Zomato will only compensate 40% of the order value. If already marked as prepared, the restaurant gets a full refund. The same rate of compensation applies if 80% of the estimated delivery time has not elapsed. Beyond this, a restaurant is eligible for full compensation.
For restaurants, it was yet more salt in the wound; the latest salvo in a six-month-long battle they’d fought against restaurant aggregator platforms. Besides Zomato, restaurants are also up against Swiggy, Zomato’s biggest rival, reservation platforms EazyDiner and Dineout, as well as hyperlocal deal aggregators Nearbuy and magicpin.
The biggest bone of contention for restaurants was the aggressive discounts facilitated and pushed by these companies. The simmering anger bubbled over in mid-August 2019, with restaurants logging out of Zomato’s subscription product—Gold. Zomato Gold offered members buy-one-get-one on food and buy-two-get-two on drinks at partner restaurants. The programme, as restaurant partners soon found out, was hurting their business. It drew bargain hunters rather than building loyalty and ate into margins.
While Zomato was the primary focus of the campaign—dubbed #Logout—its discount-focused peers soon joined it in the doghouse. (We wrote about this in August) Dineout, which was in the midst of its Great Indian Restaurant Festival (GIRF)—a month-long discount-driven dine-in promotion—also saw restaurants withdrawing.
Five days into the #Logout campaign, as the number of protesting restaurants crossed 2,200, Zomato made 10 changes to the Gold program. These included limiting Gold users to one unlock per day, and allowing a maximum of two unlocks per table. These concessions walked the delicate balance of pacifying restaurants without angering users.
At the time, it seemed like the tide was turning. The food tech Goliaths were brought to the negotiating table by armies of Davids, all rallying behind a common banner. And their numbers gave them confidence. Restaurants weren’t interested in small white flags. Their agitation came down to six major battles that had the potential to change the landscape of the industry.
Six months later, little has changed. Save for in-principle agreements, no big changes have been implemented, according to two members of the National Restaurant Association of India (NRAI).