NRAI warns restaurants against steep discounts on in-dining

The National Restaurant Association of India (NRAI) on Monday cautioned restaurants about the possible long-term adverse effects of in-dine deep discount programs and aggregator payment platforms. According to the apex hotel industry body, which represents over 5 lakh restaurants, these programs – despite appearing beneficial in the short term – could jeopardize the economic stability and autonomy of restaurants and disrupt the restaurant ecosystem.
“Our industry is at a crossroads, and the decisions we make now will shape the future of dine-in operations. Deep discounts may seem attractive in the short term, but they also pose long-term risks, particularly to the independence and viability of restaurants. When essentially bundled with the aggregator’s payment gateway,” NRAI President Sagar Daryani said.
Heavy discounting has created significant challenges in the food delivery market, and NRAI has warned that similar tactics are being adopted to capture the dine-in market through aggressive aggregator payment gateway adoption. Aggregator payment gateways provide various issues for eateries. These networks reward customers with aggressive discounts and cashback, sometimes sponsored at the expense of the restaurants themselves. However, restaurants will have to pay a substantial commission of 4-8 percent on transactions, which is much higher than the 1-1.5 percent charged by standard payment gateways.
NRAI emphasized that deep discounts present substantial economic barriers to the restaurant business. Unlimited and unstable discounts alter pricing structures, set unreasonable expectations for customers and devalue the dining experience. These practices disproportionately affect small, independent enterprises, which lack the financial resources of larger, better-funded competitors, making it harder for them to compete and survive in the long run, the industry body said .
As customers become more dependent on these gateways, restaurants face a significant risk of losing the direct connection with their customers, moving them into the ecosystem of aggregators and compromising the restaurant’s autonomy. It happens. NRAI asked restaurants to be cautious and thoroughly consider the terms and conditions of aggregator payment systems before making a decision keeping in mind the financial implications of intensive discount campaigns.