NRAI cautions restaurants against risks of deep discounting

New Delhi

The National Restaurant Association of India (NRAI) on Monday has warned restaurants about the long-term risks of in-dining deep discount programs and aggregator payment platforms. While such initiatives might seem attractive initially, the apex body, representing over 5 lakh restaurants, stated that they could harm the economic stability and independence of the industry.

Sagar Daryani, NRAI President, highlighted the dangers of deep discounting, especially when tied to aggregator payment gateways. "These discounts may lure customers, but they undermine the restaurant ecosystem and pose risks to business viability," he said. The NRAI noted that similar tactics have already disrupted the food delivery market and are now targeting dine-in operations.

Aggregator payment platforms often offer aggressive discounts and cashback, sometimes funded by restaurants themselves. These platforms charge commissions of 4-8%, significantly higher than the 1-1.5% levied by standard gateways, further straining restaurants financially. Small, independent establishments are particularly vulnerable as they lack the financial resources of larger competitors.

The NRAI also warned that unsustainable discounts set unrealistic customer expectations and undervalue the dining experience. Additionally, restaurants risk losing direct relationships with customers as aggregator platforms dominate transactions, threatening their autonomy.

The association urged restaurants to carefully evaluate the terms and conditions of such platforms and weigh the financial implications before participating in deep discounting programs. It emphasized the need for long-term sustainability over short-term gains.