
India’s Restaurants Rebel Against Food Delivery Apps - ishikawa
https://www.nytimes.com/2019/08/29/technology/india-restaurants-logout-delivery-zomato.html
======
noego
> _“The consumer believes that a discount has been his right, not a
> privilege”_

It seems disingenuous to frame this "rebellion" as a moral issue. It isn't.
It's a business issue. Business owners are free to evaluate their partnerships
and pricing strategy on the basis of what is going to best benefit their
revenue/profits. And consumers are free to evaluate potential restaurants/apps
on the basis of many factors including price. Trying to argue that someone is
acting immorally by wanting a discount, is nothing more than crying wolf.

> _" Another sore point is customer data. Neither Zomato nor Swiggy shares
> customers’ names and phone numbers with the restaurant that fills the order,
> citing privacy concerns. Restaurant owners said that left them with no way
> to market directly or build long-term relationships with their best
> customers."_

Thank God for that. The last thing I want when I order food online, is for
every single restaurant I order from to start spamming my phone/email. This
fact alone has lifted Zomato a few notches in my eyes.

~~~
logfromblammo
If you want to build a direct relationship with customers, put an 8.5"x3.5"
glossy flyer into the food order bag with your delivery phone number and your
web site address on it, and hope I don't throw it out.

If you call me up directly, I will be annoyed.

~~~
dmurray
Or your menu! Even in the age of delivery apps people still keep around
takeaway menus.

~~~
logfromblammo
(Disclosure: I barely know anything about the restaurant business.)

If you can't fit your entire menu on one tri-folded sheet of letter-sized
paper [with readable print size], it's time to do a statistical analysis on
your orders, and cut all the dishes that don't get ordered enough to recoup
the costs of offering them. Move them to the infrequent specials menu, if you
really can't stand to never make them again.

If I recall correctly, one of the major reasons single-location restaurants
fail is menu bloat. Diners take longer to decide what they want. It's harder
to identify the dishes that are least profitable. Prep is more complicated.
The order management system might require additional button presses to
navigate between pages.

And put the restaurant equivalent of keyboard shortcuts on the menu. As a
customer, I like being able to order by number, particularly by single-digit
numbers (or single letters). "Give me a number one, a number four, and a
number eight, hold the mayo."

~~~
whatshisface
I can think of a few restaurants that I quit going to after they trimmed my
favorite items off their menus.

~~~
likpok
One key business insight is realizing that some customers cost more than they
bring in.

That may or may not apply to those restaurants, but a restaurant can't be
everything to everybody. They might do better by not trying.

Consider this applied to tech companies: you need to make very different
decisions if you want to start a free social media site versus a webapp aimed
at businesses.

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geodel
Nothing unexpected here. Restaurant seems to think they should have major
profit share as theirs is main cost and effort to prepare food. Apps guys
think there wouldn't be much demand for restaurant food, weren't it for the
apps ecosystem.

In my personal experience in India just a couple of decades back restaurants
would be frequented by either rich people (obviously) or middle class on a
couple of special occasions per year. Nowadays eating outside food even few
times per week has become increasingly common. So meal price will be
overriding concern with majority of people.

As much as those 'consumer surveys' claim that customers are looking for great
quality and new experiences in food. Most folks would rather have average food
at low price after an exhausting day. I think apps will have upper hand on
this issue. As with all the knowledge of customer preferences for
price/taste/cuisine etc they can very well create centralized kitchens
producing most demanded items. At that point restaurants will again be in
similar place as they were few decades back: filled by well-off patrons or by
middle class on rare occasions.

~~~
mayankkaizen
My experience after using app is that if you really want to savour the taste,
go to the restaurant. At least food is hot and properly served.

Ordering food on app is only for the times when I am tired and really don't
want to go anywhere. In past 2-3 years, we got this habit of ordering
everything on app for various small occasions and everytime we just didn't
enjoy the food. Eventually we started again to go to restaurants and it was
worth it.

One more thing, I noticed that restaurant ratings don't mean a thing. Even
food from 4.5 rated restaurants taste horrible.

For most people, only 2 facors: laziness and discount are the driving factors
to use app. Quality of food is distant third factor.

~~~
geodel
> For most people, only 2 factors: laziness and discount are the driving
> factors to use app. Quality of food is distant third factor.

This sounds about right. I was talking to my brother and he had this similar
thought process. Once back from work at 9pm, he does not have any motivation
or energy to cook. A Rs 100-150 swiggy delivered thali is just perfect for
him. If it were more expensive or if there were no delivery option he would
simply make maggi or fry egg/paneer and eat with bread. So he would not be
customer of restaurant at all.

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SpicyLemonZest
It's hard for me to get on board with the David vs. Goliath framing here.
These people are running businesses - two of the three restauranteurs quoted
even own a whole chain. If they want to cancel their food delivery service or
demand better terms, more power to them, but it seems manipulative to try and
make their pricing negotiations a social movement.

~~~
cat199
> manipulative to try and make their pricing negotiations a social movement.

Aren't the apps negotiating terms essentially a 'manipulative social movement'
with a single app/VC backer/organizer (each)? why shouldn't the restaurant
owners organize in order to increase their bargaining power to match?

~~~
stratelogical
In the US, this - "They made a pact to pull out of Gold and other discount
programs for a few days." is collusion and is illegal.

If FTC allows restaurant owners (or any group of businesses) to create pacts
like this against their suppliers or customers, next time, they will make
similar pacts against you (the customer). "hey, what say, let's all make a
pact together and increase the price of that dosa to $50?"

In reality, some industries (most famously airlines) do this kind of collusion
through winks and nods anyway and is bad for consumers (very good for the
industry as a whole though).

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thewhitetulip
The food delivery apps abuse the restaurants. I even read news reports that
the apps had the restros pay the app's bills even though the app was wrong!

This is typical in India, the rich and powerful screw over others upon which
they have power on.

~~~
sbmthakur
> I even read news reports that the apps...

Any links?

~~~
pkteison
Grubhub charges restaurants for phone orders based on some claimed artificial
intelligence determining that an order was placed on the phone call + the
average price of the last 6 internet orders. A reporter easily found examples
where reviewing calls where they decided to charge came up with false
positives.

"I reviewed some of the recordings for Ghost Truck Kitchen and found multiple
false positives, where Grubhub charged the restaurant between $7.80 and $7.92
per call for informational phone calls that did not result in an order."

[https://www.vice.com/en_us/article/wjwebw/yelp-is-
sneakily-r...](https://www.vice.com/en_us/article/wjwebw/yelp-is-sneakily-
replacing-restaurants-phone-numbers-so-grubhub-can-take-a-cut)

~~~
sbmthakur
Thanks for chipping in. While I don't deny that could be happening in India as
well, most of the reports of mistreatment of restaurants by aggregators(in
India) have been anecdotal.

~~~
jessaustin
Wouldn't any report of anything be "anecdotal"? Journalists report stories;
they typically don't conduct double-blind studies.

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stratelogical
This is classic "Porter's 5 forces".

"The number and power of a company's competitive rivals, potential new market
entrants, suppliers, customers, and substitute products influence a company's
profitability."

There are several hundreds of thousands of restaurants (maybe millions?).
There are only 2-3 aggregators. Most of the restaurants are replaceable by a
similar one. So aggregators have more bargaining power.

As long as there is a profitable business model for the aggregators, the
restaurants will get pushed to their lowest common profits. Without resorting
to collusion with other restaurants (or asking the govt. to intervene) the
only way to compete is to differentiate significantly that makes the customer
desire a specific restaurant.

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yalogin
I shudder to imagine how much styrofoam is used to deliver this food. Even if
it’s all paaper based packaging it’s still a huge amount of waste generated. I
can see these apps increasing food delivery multiple folds and so the waste
generated as well.

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Ayesh
I was in India last month, and ordered food with Zomato and Uber Eats many
times.

Both Uber and Zomato have a lot of promotions and the food price is often 60%
of what it would have costed if I were to fine-in (I walked into same
restaurants a few times to see myself).

The amount of plastic still being used today is unbelievable! Some restaurants
send decomposable bags but the majority of the food is Inna plastic container,
with plastic cutlery, and in a plastic bag. Zomato has an option to request
not to send cutlery, but the environment is also taking a massive toll on
this. The streets are full of motorbikes honking for 20 seconds straights
every 5 seconds, and the delivery people looked exhausted too, whom I think
should be well paid too, while costing the customer more.

Another point here is that the restaurants registered tend to be more cleaner
and follow hygienist ways to prepare food. This sounds like a small point in
other countries, but I had a bad stomach for a few days and I would gladly
take someone else's word over how far I can judge a restaurant how clean it
is.

For me, the best balance is placing an order through the app (with discounts,
full menu, reviews, etc), walk in, and decide if I would like to return (this
time without the app). This way, I get to check the restaurant without
spending a lot of time, and the restaurant owner doesn't have to pay the apps
for my subsequent orders. I can also try and help reduce plastic usage .

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synaesthesisx
Why not just subsidize the discounts with VC money like everyone else?

~~~
Ayesh
I thought that's what they were doing (I'm a consumer and not a restaurant
owner). Hopefully at least Uber is burning VC money and not undercutting
restaurant owners.

------
cat199
While I get that apps may be heavy handed, and perhaps the contracts should be
renegotiated (not providing marketing data to restaurants for one seems 'off')
a simple review of 'marginal cost'/'marginal utility' accounting would
highlight that this is not necessarily the zero-sum game the article presents

If I'm getting 50% more orders at the same fixed costs with a smaller profit
margin on that subset of orders, I'm still netting higher total profits and
getting higher utilization on my existing investment..

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daodedickinson
You wouldn't download a meal!

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draw_down
I get that restaurants are not entitled to whatever profit they think they
should make, but that is true of the apps too. In the end, I wonder how the
presence of these apps in the ecosystem makes things better, considered
holistically.

They have so little incentive to care about, for example, the quality of the
food when it arrives, because if it's poor that will reflect on the
restaurant, not the service. They will also do things like try to honor orders
for restaurants that have explicitly rejected working with the services,
because they just don't care what the restaurant wants.

This is supposed to be the restaurant and the service working together to get
the customer their food, but the incentives just seem misaligned the whole
way. I'm guessing the end goal here for the services is to run the
"restaurants" themselves.

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tracer4201
On one hand, no one is forcing your restaurant to sign up to the app.

On the other hand, my anecdotal experience is these food delivery apps
typically have had garbage service (my orders are delayed hours, missing items
I paid for, etc.) and not properly pay their employees (contractors) while
taking losses to capture the market before regulation can catch up and
solidify their hold (I.e. cost of entry for small players becomes excessive).

I don’t support the business model, and I don’t give them my business.

------
fit2rule
Restaurants should just produce their own apps. Problem solved.

Whats that? Its too hard? Well someone should make an app that makes it easy
for restaurants and customers to have a relationship with each other, without
involving a third party.

What's that, its too hard? Well, the OS vendors should just make it easier for
a person to contact another person and place safe orders with each other ..

~~~
nix0n
> someone should make an app that makes it easy for restaurants and customers
> to have a relationship with each other

They already exist and they're installed by default. Maps to find a nearby
restaurant, browser to look at the menu, dialer to place the order.

~~~
fit2rule
Not really. These things are barely functional to most of the rest of the
world. Maybe Maps finds things to eat in America, but its generally useless
outside that market.

There should be much more robust means of restaurant order taking that could
be performed by an OS ..

~~~
thekid314
This is true, outside of the US and parts of Europe Google Maps is lacking,
Apple Maps is barren, sometimes Maps.me has local people that keep it updated.
There is a real gap waiting to be filled.

Thi is my experience around the Middle East and Western Africa.

~~~
Ayesh
FourSquare could have been this, when they were good. They have many
restaurants, photos, tips, photos of the paper menu, etc. Google Maps caught
up and it, and from places I have been in Europe, Asia, and middle East, their
photos, review, and information seem accurate and helpful enough.

