In addition to recently increasing fees for food delivery orders, it is encouraging restaurants to spend more, including advertising on its platform and paying for cancellations.
Zomato is approaching restaurants to increase their marketing spend on the platform, according to three people familiar with the Zomato discussions.
some restaurant owners your story The companies said they were asked to spend at least 5% of the revenue they make on Zomato on advertising on the platform to increase their visibility. your story I’ve seen copies of emails sent to several restaurant brands advising them to increase their advertising spend on Zomato.
“They told me that if I paid more for advertising, it would increase my visibility and rank significantly higher on the app,” said one restaurant partner, who requested anonymity. “It essentially meant that brands that did not spend at least 5% of their revenue would suffer in terms of prominence.”
Pay-per-click advertising helps your restaurant appear at the top of your app’s search pages. Zomato also allows brands to advertise through dynamic video and banner listings. Currently, it is voluntary for restaurants to pay for advertising. It wasn’t immediately clear how much he was earning for Zomato through advertising on the platform.
Zomato’s battle with its restaurant partners could intensify in the coming months as the company seeks to double its profitability and reverse the decline of its food delivery business.
Another restaurateur, who spoke on condition of anonymity, said Zomato’s encouragement for restaurants to spend minimal money on advertising on its platform is another way to distort its brand. “Zomato asserts a dominant position by making unreasonable demands.”
Spending on advertising should be at the restaurant’s discretion, according to this person, and determined according to target audience, geography, and bandwidth to process online orders.
A Zomato spokesperson said, “We have no policy mandating app marketing costs for our restaurant partners.” your story.
“That said, we have policies in place for underperforming restaurants that require additional support on the platform (e.g. highest volume of veg/non-veg orders, repeated hygiene and quality issues, etc.) , so a viable customer experience remains intact for minimal customers.
Some of our restaurant partners say they’ve been asked by Zomato to lower their online prices so they’re on par with regular restaurants. Restaurants usually charge higher fees to compensate for discounts and other fees charged by food delivery platforms.
Zomato will generally cover the cost of refunds for canceled orders, unless there are repeated quality issues or the order has been canceled by the restaurant. Order cancellations are less than 10% of all orders.
Zomato is now asking some restaurants to cover cancellation and customer support fees, according to two of the three people above. It’s not clear if these restaurants are rated poorly or indicate a true quality issue.
In 2021, restaurants have expressed concern about penalties for canceling orders under a new set of terms and conditions. Restaurants that do not comply with the terms may be removed from the platform.
Zomato responded that the policy has been around for eight months, has a higher-than-average cancellation rate for the platform, and only applies to short-lived restaurants.
restaurateur your story I said that similar terms are likely to reappear.
Another industry executive, who asked not to be named, said: “We’ve been working on this issue for some time and never thought it would come up again, especially at a time when Zomato was already considering a hiking commission.” .
Earlier this week, your story Zomato reported that it was asking restaurant partners to pay higher commissions as it weathered a slowdown in its food delivery business and focused on profitability.
The National Restaurant Association of India (NRAI), the supreme body representing more than 5 million restaurants in India, is at odds with aggregators such as Zomato and Swiggy, challenging their heavy discounting practices and alleged data masking. chanting.
NRAI has also filed a complaint against the food delivery platform with the Competition Commission of India for anti-competitive practices.
“This kind of unilateral increase encourages unfair trade practices and NRAI strongly opposes it,” said an NRAI spokesperson.
In its most recent December quarter, Zomato reported a 0.1% decline in adjusted revenue from the previous quarter, primarily due to lower order volumes.
“Since late October (after Diwali), the food delivery business has slowed across the industry. This trend is seen across the country, but is even more pronounced in the top eight cities,” said CFO Akshant Goyal. said in its financial statements.