Zomato is an online food delivery startup. It was founded in 2008. Zomato provides home delivery service, multiple users reviews, information about hotels and restaurants and various other services. This company initially functioned across India, now it functions across 24 countries. Zomato recognized the key factors that attract the customers and focused exactly on that. Food is the prime allurer, it moves the whole world. With a variety of taste and modernized technology, Zomato came up with its food delivery app.
Zomato has 4 primary stakeholders:
1- Its Customers
2- Its partners (Restaurants and hotels)
3- Delivery executives
4- The company.
It also has a team for customer care and city-wise management. They gain their revenue through Advertisements, Commission, Subscription, Delivery charges and Other products. Apart from the primary sources of expenditure, Zomato incurs heavy expenditure due to its heavy discounting policy and on delivering the food through delivery executives. Zomato’s initial plan wasn’t to continue with this heavy discounting policy but it had to due to fierce competition in the market. In India, automobile and food delivery services have been going in the same direction. To face the increasing competition these businesses have been engaging in heavy discounting policies. The restaurants bore the brunt of these heavy discounts, which came at the expense of their brand image, core value proposition and bottom-line.
The log out movement was a protest against the practices that had been followed by the company. The Federation of Hotel and Restaurant Association of India (FHRAI) is one of the biggest body of this industry. FHRAI along with its 27000 extended support to the #logout campaign by the National Restaurant Association of India. Thane Hotel Association, Pune Restaurants and Hotel Association, Pune Restaurants and Hotel Association (PRAHA) Vadodara Food Entrepreneurs (VFE) have also joined the movement.
Zomato is a marketplace that connects a large number of buyers and sellers. While taking decisions Zomato neither heeded to the possible losses that the restaurants and hotels would have to bear nor did zomato consult with them before announcing its new policies. The main concern was Zomato’s Gold Programme which offered one-on-one offers on food and drinks to dine-in customers at partner restaurants. In September, Zomato diluted the programme but introduced the Gold offering on delivery as well, which led to further discontent among NRAI members. Over a 1,000 restaurants pulled out of membership over concerns that reservation apps were hurting business with their discounting driven model.
Restaurant operators viewed Zomato as having its cake and eating it, too. Gold was a paid subscription and some of the newer restaurateurs wanting to enrol had to pay a sign-up fee of Rs 45,000 to give away free food. The rate shot up to Rs 79,000 if a restaurant that had logged out wanted back in. This rejoining fee has been temporarily waived.. The National Restaurant Association claimed 2,500 restaurants have logged out of Gold and other apps. Zomato now has more than 5,150 restaurants onboard compared with about 6,500 earlier. There are over half a million restaurants in India, excluding the unorganised ones, and the industry is valued at $4 billion. However, rising rentals amounting to almost 20% of costs, the food at 30% and other expenses like labour and marketing at 20% are hurting the industry.
Due to extreme discounts, people are getting discounts addicted and are ordering more and more just to get discounts while the customers can this can have a bad effect on health also there can be a breach of hygiene in the whole delivery process. This protest pointed out everything that has been going wrong from the company’s end and the consumer’s end. Such an event was necessary for the policymakers to realize how their policies were affecting people.