Panaji, 18th, May 2023: Citing the unsustainability of the commission-heavy business model followed by popular food aggregator and delivery apps (FADA), restaurateurs in Goa as well as the state chapter of the National Restaurants Association of India (NRAI) have called for increased dialogue between the two stakeholder groups to evolve a mutually beneficial business template.
In a technology-driven world, where the association between restaurants and FADA operators once seemed like a marriage made in heaven, in recent times, restaurant owners in Goa as well as across the country are now collectively bargaining for a fair deal from FADA.
“We believe that the business model is not sustainable because neither of the parties is making any money. So we are looking to get them to explain to us how they can make this sustainable in the future, so that’s what we are waiting to hear,” according to Prahlad Sukhtankar, who heads the Goa chapter of the NRAI.
In the early days, the emergence of FADA seemed like a boon for restaurant owners as well as customers, who were coming to terms with using technology to tap into day-to-day utility services.
“I would think more than anything, an aggregator has given the ideal platform to place an order in a very efficient and time-bound manner with the use of an app. Today’s consumer doesn’t want to go through the entire process of making a phone call to order their favourite food. The customer would rather prefer three easy steps until their order goes live and that’s how the app helps,” says Akshay Quenim, who is a member of the NRAI as well as the promoter of Tataki, a well known Oriental restaurant in Panaji.
The ‘arrangement’ with FADA helped save the restaurants on overheads like salaries and the cost of hiring delivery personnel and purchasing delivery vehicles.
“On the flip side, apart from a restaurant paying a very exorbitant commission to the aggregator, the restaurant is losing control of operational aspects; such as, whether the food is being delivered in the right manner – Is the food being delivered upside down thus causing spillage and other non-ideal situations,” Quenim said.
In 2019, the NRAI launched a #Logout campaign to protest against the discounts and offers being provided to consumers by the FADA at the expense of restaurants. The campaign helped bring the restaurant industry together to work towards achieving a shared goal.
Restaurateurs like Pranav Dhuri, who runs the iconic Café Tato chain in Goa, are also piqued by the FADA’s penchant for linking customers’ discounts to visibility on the food delivery apps.
“The discounts and offers are being provided to the consumers at the expense of restaurants. If we don’t provide such offers then the visibility of the restaurant gets impacted negatively on the app,” Dhuri said.
The NRAI and its pan-India network of restaurants are now tinkering with options other than the popular FADA operators, like DotPe. The central government’s newly introduced Open Network for Digital Commerce, which allows restaurants to directly sell food to consumers without the involvement of a third party, is also emerging as an alternative option.
According to Ujjwal Tripathi, who runs Nanbai, a popular café near Panaji, FADA operators need to look at achieving sustainability, rather than relying on discounts and offers alone for popularity.
“The fact of the matter is that and currently they (FADA) are not profitable, they’re not making money, they’re loss-making companies. The customers who order from these platforms are enjoying the benefits in the form of discounts, etc. If this continues for much longer and they are unable to either attract enough customers to generate sufficient revenue to cover their losses or increase their commission rates to compensate for the losses, they may face significant financial challenges. It’s not going to be sustainable,” Tripathi said.