Business Companies 20 Aug 2019 Pressure mounts on f ...

Pressure mounts on food apps to reduce discounts

DECCAN CHRONICLE. | SANGEETHA G
Published Aug 20, 2019, 2:41 am IST
Updated Aug 20, 2019, 2:41 am IST
Last week, around 1,000 restaurants from across the country had decided to pull out of membership and restaurant reservation apps.
The Federation of Hotel and Restaurant Associations of India (FHRAI) said it has been receiving complaints from restaurants about food technology platforms like Zomato, Swiggy, Nearbuy, Dineout Prius Heights, EasyDiner and Magicpin. (Photo: DC)
 The Federation of Hotel and Restaurant Associations of India (FHRAI) said it has been receiving complaints from restaurants about food technology platforms like Zomato, Swiggy, Nearbuy, Dineout Prius Heights, EasyDiner and Magicpin. (Photo: DC)

Chennai: Hotels and restaurants have stepped up pressure on food technology platforms to reduce the discounts and commissions. After several restaurants logged out of these platforms last week, the umbrella body of hotels and restaurants association has also stepped in and asked the food service aggregators (FSAs) to review the practices.

The Federation of Hotel and Restaurant Associations of India (FHRAI) said it has been receiving complaints from restaurants about food technology platforms like Zomato, Swiggy, Nearbuy, Dineout Prius Heights, EasyDiner and Magicpin.

 

Last week, around 1,000 restaurants from across the country had decided to pull out of membership and restaurant reservation apps.

According to the FHRAI, "impractical, unaffordable and unconscionable discounting" has put the hospitality industry in an unwieldy situation.

The contracts signed by them with restaurants are one-sided,' it alleged. "These contracts aren't even consistent across the industry and almost always unfair towards start-ups as against established brands. A model contract, which is mutually agreed upon, has to be accepted. Such a conduct is indicative of dominant behaviour and is indeed exploitative. Further, the agreement terms are not sacrosanct as they are frequently and unilaterally changed from time to time and always in favour of the food service aggregators," said Gurbaxish Singh Kohli, Vice President, FHRAI.

The FHRAI has also alleged that FSAs extract unreasonably high commissions and arbitrarily apply additional charges.
"Penal commissions of 25 per cent are now standard. Such high charges merely for offering a platform are unjustified… Payment terms are not adhered to and are easily violated for the slightest excuse without recourse to any easy dispute resolution. It has also been brought to our notice that GST is being charged on the commission and high commissions are being extracted from merchant establishments under the pretext that it is for both discovery and sales promotion. But then they are also charging separately for delivery and yet billing customers an additional delivery charge, which is tantamount to double dipping,' said Kohli.

Further, FSAs show customers that a restaurant is closed when delivery boys are not available. Restaurants have also complained about the imposition of FSAs' absurd food acceptance, food preparation, food collection time with penalties and a negative grading system.

FSAs also mask the number of the customers. By doing so, FSAs have completely disconnected restaurants from its customers, the FHRAI said. "It is the restaurant's prerogative to know who its customer is,” said Kohli.

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