The National Restaurant Association of India (NRAI), an industry body representing the interests of over 5 lakh restaurants in India, has advised its members about the long-term adverse effects of deep discounting from aggregator platforms on dine-in services.

NRAI also urged its members to explore alternatives to the aggregator’s payment gateway tools, such as payment wallets, and go for them only if they make financial sense compared with other payment gateways.

According to the NRAI advisory, aggregators are trying to tap into the entire value chain from dine-in reservations to payments and are enticing customers to use their platform through aggressive cashback and discounts. Platforms are also earning a commission from restaurants on dining transactions despite adding no incremental value to the dine-in experience.

Restaurants pay around 4-8 per cent as a payment gateway charge to the aggregators whereas other payment gateway charges are between 1-1.5 per cent of the transaction value.

NRAI also pointed out that aggregators charging restaurants a reasonable fixed fee for securing reservations is acceptable. However, high commissions as a percentage of sales for in-dine reservations and the use of payment wallets of aggregators should not be made mandatory.

The association is apprehensive that the in-dining market will face similar detrimental effects as the online food delivery market if left unchecked.

NRAI president Sagar Daryani told The Telegraph that such deep discounting by aggregators which have the cash to burn to offer high commissions could pose challenges, particularly for small and medium-sized restaurants which may lose direct ties to customers with the risk of ceding control over operations and pricing strategies.

“Our industry is at a crossroads, and the decisions we make now will shape the future of dine-in operations. Deep discounting may appear appealing in the short term, but they also pose a long-term risk to the restaurant’s independence and viability, especially when bundled with the aggregator’s payment gateway,” Daryani said.