Restaurant body NRAI approaches CCI on deep discounting, data masking, more by Zomato, Swiggy

The hotel and restaurant sector’s total revenue in FY20 was Rs 1.82 lakh crore of which around 75 per cent, as per FHRAI estimates was wiped off in FY21.

Ease of Doing Business for MSMEs: Restaurant body National Restaurant Association of India (NRAI) on Monday said it has approached the competition regulator Competition Commission of India (CCI) to highlight the “anti-competitive” practices of foodtech businesses Zomato and Swiggy. In an “information” filed with the CCI this past Thursday, NRAI noted multiple areas of concern to a number of its partner restaurants in the country that had to shut shop “due to onerous terms imposed” by the two food delivery startups.

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“Bundling of services, data masking and exorbitant commission charged, price parity agreements, forcing the restaurant partners to give discounts to maintain an appropriate listing, exclusivity of listed restaurants, violation of platform neutrality, and vertical integration and lack of transparency on platform,” NRAI said in a statement. The association currently represents the interest of over 5 lakh restaurants in India.

“We have been in constant dialogue with the foodservice aggregators over last 15-18 months to resolve critical issues impacting the sector. However, despite all our efforts, we have unfortunately not been able to resolve them with the aggregators. The needle hasn’t moved much on these issues. We have therefore approached the CCI now to look into the matter and investigate them thoroughly,” said Anurag Katriar, President, NRAI.

The body claimed that restaurants have been facing numerous issues in their dealing with the marketplace platforms Swiggy and Zomato since 2018. NRAI maintained that when these marketplace platforms started, they had certain advantages, however, over a period, their business practices started hurting the F&B industry massively. However, “during the pandemic, the magnitude of anti-competitive practices of Zomato and Swiggy have increased manifold and despite numerous discussions with them, these deep funded marketplace platforms are not interested to alleviate the concerns of the restaurants. In fact, during the pandemic, due to onerous terms imposed, a lot of our partners had to shut shop.”

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Hospitality has been among the sectors witnessing maximum impact due to Covid. To alleviate its concern over survival, the Reserve Bank of India had recently announced separate liquidity support of Rs 15,000 crore with tenure up to three years for the contact-intensive sectors such as hospitality and ancillary services till March 31, 2022. However, the industry had reached out to the Tourism Minister Prahlad Singh Patel and MSME Minister Nitin Gadkari last month to recommend “immediate fiscal measures to save it from imminent collapse,” the apex hospitality association Federation of Hotel & Restaurant Associations of India (FHRAI) had said.

“Hotels’ recovery would take at least three years after everything gets back to normal and travel is fully allowed. It would be juvenile to think about recovery in the coming few months of unlock to reach the pre-Covid levels. Even if people start eating out and travel, it would not compensate for the 1.5 years of closure. Restaurants will take 1.5 years to recover if there are no restrictions and no social distancing norms. The sector has a large portion of MSMEs,” Gurbaxish Singh Kohli, Vice President, FHRAI had told Financial Express Online.

The hotel and restaurant sector’s total revenue in FY20 was Rs 1.82 lakh crore of which around 75 per cent, as per FHRAI estimates was wiped off in FY21. This is over Rs 1.30 lakh crore revenue hit for the Indian economy. The total loan outstanding to the hospitality industry was more than Rs 60,000 crore currently, the body added. Due to financial losses, 40 per cent of hotels and restaurants in the country have shut down permanently and around 20 per cent haven’t opened fully since the first lockdown while the remaining 40 per cent continue to run in losses, it added.