August 15, 2020

The true reality of restaurant aggregators, vultures picking on the bones of the hospitality industry!

Insights

It has been almost 5 months since 22nd March, the day we observed a nationwide Janta Curfew, followed by an unprecedented lockdown which has elementally been a period of complete inoperation. That’s 4 more months than what your average neighbourhood restaurant can survive, without an external bailout. While almost every business has borne the brunt of the lockdown, the hospitality industry by virtue of its cashflow driven nature and paper thin profit margins, particularly has been one of the most adversely impacted of all. As things stand, four out of ten restaurants are at risk of permanently shutting down their businesses. This places the hospitality industry, that provides direct employment to over 70 lakh individuals and touts a turnover of rupees 4 lakh crores, in grave peril. And, reprise is still distant as customers are yet somewhat afraid to venture with their food choices. 

Restaurants have had to shut down operations without a guarantee of re-opening again!

Why are restaurants in an extremely vulnerable situation today?

The reason is overdependence of restaurants on aggregators; whether by choice, beneficial or not, can be debated. However, it is an irrefutable truth that the exorbitant commissions, customer data masking and, near to extortion advertisement charges to ensure “visibility”, are weighing the restaurants down. It is disputable that aggregators help restaurants acquire new customers, but at what cost? Furthermore, are these customers truly acquired? It is naive to believe so! These customers are loyal to the aggregator platforms and not the restaurants itself. Ironically enough, these pseudo loyalties towards the aggregators have been built on the foundation of deep discounting and offers, that too at the expense of the very restaurants enlisted on them. If anything, the aggregators have engendered chronically elevated and impractical customer expectations that are infeasible with the economics of the restaurants’ sustainability. And for all this, aggregators have been audacious and rather impudent enough in charging restaurants a commission equal to a third of their revenue - often more than the net profit margins itself, of course, without any investments, sharing of risk or management efforts. Even a blind man would see this and call it out as blatant embezzlement of the restaurants’ revenues. 

Aggregators vs Thrive

Now, is this a new-found problem? Not really!

 In late August last year, due to these issues itself, the hospitality industry collectively “Logged Out” of discount heavy platforms such as Zomato Gold, EazyDiner, Dineout’s Gourmet Passport, Nearbuy and MagicPin. This movement was charged by none other than the National Restaurant Association of India. Their fight was against the deep discounting culture instilled by the aggregators and their divide and rule policy of pitting restaurants against each other on the premise of this unethical discount race. Furthermore, citing examples of discounts given independently by a particular restaurant, the co-founder of Zomato justified their act in the name of democratizing discovery and dining out. Worse, he showed complete disregard towards their restaurant partners' plight by exiting the dialogue with “Zomato is logging out of the logout campaign”. 

NRAI led Logout Campaign against aggregators!

Why is this problem still relevant today?

These have been the state of affairs since then, so why are these catch-twenty-twos coming to light again? Because it has taken a pandemic to make the penny drop for restaurants, that slowly but steadily, the status quo has unfairly shifted and the reigns of their own businesses have slipped from their hands into those of the aggregators. They have lost control to the extent where aggregators introduced “contactless dining” for their restaurants, without even consulting them. This solution doesn’t truly address the restaurants’ priorities which are employee well-being and customer experience; it does nothing but further aggravate their employees’ existing under-utilized state. Despite this, aggregators have successfully bullied restaurants into accepting this solution. These aggregators are nothing but a syndicate of digital landlords running a monopoly at the cost of the very restaurants that built them. Thus, highlighting the restaurants’ true misfortune is not the pandemic but their dependency - addiction to the aggregators. 

Fragmented restaurant technology

What is the true challenge?

Maybe if restaurants weren’t so technologically handicapped, their businesses wouldn’t have been under the heels of the aggregators today. Maybe if they were equipped with better technology of their own, they could’ve jettisoned the parasitic aggregator solutions long before. The fragmented nature of solutions available to them don't make this easier either. They're forced to accept the somewhat bundled solution provided by these aggregators, but at an unaffordable price of their profits. If they were equipped with a consolidated independent solution the predicaments of their present would’ve been manageable and their futures more secure. 

Thrive, the all-in-one online ordering system

What was our, Hashtag Loyalty’s response?

We asked ourselves, what will it take for restaurants to not only survive but also thrive in the new normal? And, in answer to this, we at Hashtag Loyalty developed Thrive, an all-in-one online ordering system for restaurants with integrated delivery services, in-built Marketing CRM and Loyalty Program. It is our effort to help restaurants become self-sufficient. It is our endeavour at enabling restaurants to emerge stronger from this crisis.

How does Thrive help?

Thrive enables restaurants to set up their own online ordering system, allowing their customers to place orders for pickup, delivery or dine-in at their tables, right from their smartphones. It ensures seamless ordering for customers via the digital menu, billing and payment. It enables restaurants to operate their own deliveries with a robust order management dashboard and third-party fleet integrations. It allows restaurant customers to earn and redeem rewards and keep them coming back for more thanks to an integrated loyalty program. It helps them improve their product, experience and service by gathering feedback. It entrusts the ownership of customer data to the restaurants along with business insights and intelligence. It allows the ability to engage with customers and thus increase repeat orders and visits by dint of a PoS connected marketing CRM. It fundamentally puts restaurants back in charge of their businesses.

Sounds good, but what does it cost?

Thrive is available to set up free-of-charge for restaurants. There are no exorbitant commissions but just a minimal charge of 3% per delivery or takeaway order and only Re. 1 per dine-in order, to cover the cost of operations. Thrive has been built not to profit off but to proliferate the autarky of restaurants. 

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We at Hashtag Loyalty are eager to help you reap the rewards of your efforts using Thrive. Speak to us to learn more!


Written by

Anshul Jasani

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