At a time when the National Restaurants Association in India has locked horns with food apps such as Zomato and Dineout, the Federation of Hotel & Restaurant Associations of India (FHRAI) has called upon Food Service Aggregators (FSAs) to engage in a fruitful dialogue with the Federation and its affiliated associations.
This comes after NRAI launched a Logout campaign against apps such as Zomato and Dineout against their deep discounting offers.
According to a statement from FHRAI, it has written to Zomato, Swiggy, Nearbuy, Dineout Prius Heights, EasyDiner and Magicpin based on widespread complaints along with condemnation and agitation from its members, regional associations and affiliated associations regarding various issues that are hurting the Industry.
In the letter, it says that it has pointed out to unethical business practices and has called for review of all their schemes. It has called for a dialogue failing which it has warned of nationwide protests.
“This new way of impractical, unaffordable and unconscionable discounting has put the hospitality industry in a very awkward situation. The most common complaint with the FSAs is about the contracts being one sided. These contracts aren’t even consistent across the industry and almost always unfair towards startups as against established brands. A model contract which is mutually agreed upon has to be accepted,” Gurbaxish Singh Kohli, Vice President, FHRAI said in a statement.
The federation has also claimed that their behaviour is dominant and exploitative. It claims that the agreement terms are frequently and unilaterally changed from time to time and always in favour of the FSAs.
The FHRAI has also pointed out to the unreasonably high commissions, payment terms and arbitrarily applied additional charges as well as unethical practices by the FSAs.
“Penal commissions of 25 per cent are now standard. Such high charges merely for offering a platform are unjustified. Commissions are not standard and customized to exploit the startups which are indicative of an exploitative and dominant behaviour. Payment terms are not adhered to and are easily violated for the slightest excuse without recourse to any easy dispute resolution,” Somaraju, Honorary Treasurer, FHRAI added.
S K Jaiswal, Vice President, FHRAI further adds that these practices translate to arm twisting its members to subscribe to initiatives using their dominant position.
He claims that restaurants are subtly threatened to participate in deep discounting schemes without respite through the year with one scheme getting replaced by another.
“Our members are neither given an option nor the opportunity to agree nor are they even consulted. Promises made while launching any new scheme is almost always broken by changing the rules itself. For instance, a scheme called ‘Gold’ was launched by Zomato with an assurance that only handful restaurants in each area would be enlisted. But later Zomato approached every outlet to participate which amounts to cheating our members who have no recourse considering all the above stated positions,” he adds.
Gurbaxish adds that they are in favour of doing business, but one that is a win-win for everyone involved.