NRAI Issues Alert to Restaurants on Risks of In-Dining Deep Discount Strategies
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New Delhi, Dec 9 (NationPress) The National Restaurant Association of India (NRAI) has issued a warning to restaurants about the potential long-term negative impacts of in-dining deep discount initiatives and aggregator payment systems.
As the leading body representing over 500,000 restaurants, the NRAI highlighted that while these programs may seem advantageous in the short term, they could jeopardize the economic viability and independence of restaurants, ultimately disrupting the overall restaurant ecosystem.
“Our industry stands at a pivotal moment, and the choices we make today will determine the future of dine-in operations. Although deep discounting may look attractive initially, it carries significant long-term risks to restaurants' autonomy and sustainability, particularly when it is bundled with the aggregator’s payment gateway,” remarked Sagar Daryani, President of the NRAI.
Deep discounting has already created substantial obstacles in the food delivery sector, and the NRAI cautioned that similar strategies are being used to dominate the dine-in market through the aggressive adoption of aggregator payment gateways.
These aggregator payment gateways create numerous challenges for dining establishments. They often incentivize customers with steep discounts and cashback offers, which are frequently funded at the expense of the restaurants themselves.
Moreover, restaurants are obligated to pay hefty commissions on transactions, ranging from 4-8%, which is significantly higher than the 1-1.5% charged by conventional payment gateways.
The NRAI underscored that deep discounting imposes considerable economic challenges on the restaurant sector.
Unrestricted and unsustainable discounts distort pricing structures, creating unrealistic expectations among customers and devaluing the overall dining experience. Such practices disproportionately impact small, independent restaurants, which often lack the financial backing of larger, well-capitalized competitors, making it increasingly difficult for them to compete and thrive in the long term, according to the industry body.
As customers grow more dependent on these gateways, restaurants face a serious risk of losing direct connections with their clientele, effectively shifting them into the aggregator's ecosystem and undermining the restaurant's independence.
The NRAI urged restaurants to exercise caution and carefully evaluate the terms and conditions of aggregator payment platforms before making decisions, considering the financial consequences of deep discounting strategies.
