Zomato has been in the news for all the wrong reasons lately, from its tweet ‘food has no religion’ where the hypocrisy of the company was exposed to the #Logout campaign started by the National Restaurants Authority of India (NRAI) over the unsustainable deep-discounting model of its flagship scheme Zomato Gold, the company’s troubles only seem to be mounting as the company has so far failed to make any headway with the NRAI. In total disregard for the concerns of the NRAI, Zomato has now extended its flagship scheme Zomato Gold to home deliveries too which has prompted the NRAI to slam the food aggregator company over its ‘desperate moves.’
Zomato Gold had come under heavy fire due to its deep-discounting model which made the consumers increasingly hooked to discounts which were entirely borne by the restaurants. Zomato Gold was launched with much fanfare as restaurants made a beeline to be a part of the scheme as the Fear Of Missing Out (FOMO) crept in. Despite the initial success in attracting new customers, the restaurants found it unsustainable to continue being a part of Zomato Gold as some consumers often used to abuse their Gold membership due to the leeways granted by Zomato.
The annual Gold membership was offered at dirt-cheap prices at its infancy which was also a major bone of contention between the restaurants and Zomato as the former demanded the price of membership be increased. There was a feeling that through Gold, the Indian consumers will be addicted to the vicious cycle of deep-discounting which is certainly not sustainable for a longer time. The desperate pleas of restaurants fell on deaf ears and hence the NRAI took the extreme measure of delisting restaurants from Zomato Gold with its #Logout campaign as over 1,000 restaurants decided to delist themselves from Gold. This forced Zomato to look into the demands of the NRAI but the company was failing to make any headway and the NRAI baulked when Zomato announced its plans to extend the Gold membership to home deliveries too.
The NRAI clearly stated their displeasure and ascertained that such a move would prove to be counter-productive but that didn’t stop Zomato from extending its Gold membership on its home delivery platform with now existing and new Gold members will be able to use Gold for home delivery orders. The programme is currently available in 16 cities.
NRAI in a statement said, “It is another instance of Zomato changing the goalpost. Gold was originally launched as a tool to promote the culture of ‘dining out’, but now it is being extended on deliveries too. Essentially, it is now a programme that merely promotes ‘deep discounts’ on both dine-in and delivery verticals, the cost of which is borne solely by the restaurant partners. We expressed the same unequivocally to the Zomato team in our recent talks. However, in utter disregard to the viability of the restaurant fraternity, they have chosen to extend the programme further to the delivery vertical as well.” Such a unilateral move by the food aggregator company can lead to serious implications for the food aggregator industry as Zomato is making the industry rely heavily on discount gimmicks. Needless to say, with this move the relationship between the NRAI and Zomato has effectively reached a point of no return which will not bode well for the company soon enough.
It seems that Zomato has no sense of priorities as it continues to preach its hollow definition of secularism and ‘food has no religion’ gimmicks. The company will be better off if it decides to instead focus on solving the dispute with the NRAI as more restaurants continue to log out from the platform which will effectively make it an unattractive proposition for its customers leading to customers not renewing their membership especially at a time when the price of the membership has been increased to Rs 1,800.