The National Restaurant Association of India (NRAI) has issued a cautionary advisory to its members regarding the potential long-term impacts of aggressive discounting practices and the use of aggregator payment gateways in the restaurant industry. While these strategies may seem advantageous in the short term, they could undermine restaurants' economic stability and independence, disrupting the overall dining ecosystem.
The NRAI highlights that deep discounting has already posed significant challenges in the food delivery sector, and similar tactics are now being applied to the dine-in market through the adoption of aggregator payment platforms. Such practices create unsustainable pricing structures, leading to unrealistic customer expectations and devaluing the dining experience, particularly affecting small, independent restaurants that struggle to compete with larger, well-funded entities.
Sagar Daryani, NRAI President said, "Our industry is at a crossroads, and the decisions we make now will shape the future of dine-in operations. 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.”
He further added, "As the voice of the industry we are committed to protecting the interests of the restaurant community and ensuring a fair and sustainable ecosystem. NRAI encourage the members and the broader restaurant community to engage with industry colleagues, consult their platform representatives about these programs' tangible benefits, and exercise thoughtful caution and sound judgment before deciding to participate.”
The advisory also notes that aggregator payment gateways can impose high transaction commissions (four to eight per cent) compared to traditional payment systems (one to 1.5 per cent), often incentivising customers with discounts that may come at the restaurants' expense. Additionally, these platforms can lead to a loss of direct customer relationships and control over vital revenue and customer data.
The NRAI encourages restaurants to carefully evaluate the terms of aggregator payment systems, consider independent payment options, and prioritise maintaining customer relationships to ensure their long-term sustainability and autonomy.
