FHRAI Consolidates FSA Related Issues Faced By Restaurants Across India

Creates A 6 Point Action Plan To Take Up With FSAs; Welcomes Additional Inputs From Members

Mumbai, Aug 20: A day after providing intimation to the Food Service Aggregators (FSAs) regarding various issues hurting the industry, the Federation of Hotel & Restaurant Associations of India (FHRAI) has chalked out an action plan to take it up with the concerned organisations and departments. Based on complaints and grievances received from restaurateurs across the country, the Federation has consolidated the most common issues caused due to the FSAs’ unfair business conduct. In the meanwhile, the Apex hospitality body has sought inputs from its regional Associations including NRAI, HRAWI, HRAEI and SIHRA; as well as other affiliated Associations for coming up with a comprehensive report to sort out all matters related to the FSAs that are affecting the industry.

“We have reached out to the FSAs and have asked that we sit across the table to arrive at a win-win outcome for all. In the letter marked to the founders and CEOs of the online Food Delivery we have submitted a list of issues that our members are facing while dealing with them and have suggested constructive options against the issues listed. We are yet to hear from them. Meanwhile, we are consolidating inputs from all our members and affiliate Associations and have come up with action points to get the concerns acknowledged and addressed on behalf of the fraternity,” says Mr. Gurbaxish Singh Kohli, Vice President, FHRAI.

Among the top issues, the FHRAI has narrowed down six points to action which include 1) Consulting Industry Associations, 2) Profitability, 3) Unfair Customer Appeasement Practices, 4) Deliberate Policing, 5) Competing with each other and 6) Legal & Taxation aspects.

“We believe that the role of industry associations has been deliberately kept limited, leading to a one-way communication, leaving no opportunity for the industry to have conflict management mechanism in place. With regards to the eroding profits, unlike e-commerce companies with continuous inflow of Foreign Direct Investment (FDI) and access to funds, restaurants don’t. A win-win situation is a need of the hour and any strategies adopted by the FSAs for their profits should directly benefit the restaurant industry too,” adds Mr. Kohli.

The FHRAI has highlighted that with consumers having become more used to ordering food online, the FSAs have adopted appeasement practices by offering discounts which in turn is creating a dent in the restaurant industry and taking a toll on its profits.

“While FSAs are floating offers and discounts to lure customers, it is coming at a cost to the restaurants. Restaurants may be able to sustain such discounting only for so much time because an enterprise has overheads and operating costs. If a restaurant withdraws from discounting, the FSAs app immediately downgrades it and favours another restaurant which may still be in a position to discount. This is just not fair. It’s pitting one restaurant against another basis their capacity to afford discounting. Additionally, the industry feels that with easy access to the consumer through their e-commerce platforms, the FSAs have deliberately started policing the restaurants,” says Mr. Pradeep Shetty, Hon. Jt. Secretary, FHRAI.

The industry has alleged that the agreements signed between restaurants and the FSAs are almost always favourable for the latter. FHRAI has also stated that the taxation aspect is not in-line with the rules and regulations such as collection of GST on delivery charges and including it in the bill.

“Firstly, there is ambiguity between what is verbally promised versus what the restaurant finally agrees into. Furthermore, the agreements are frequently tweaked or new clauses are included which tend to become more and more unilateral over time. There should be scope of negotiation in agreements depending on the size of the outlet. Restaurants are part of the hospitality industry however e-commerce FSAs are tech enable companies. It has been observed and experienced on various occasions that rather than acting as tech service provider, FSAs have adopted the policy of competing directly with the restaurants eventually sabotaging the image of hospitality,” concludes Mr Shetty.

About Federation of Hotel & Restaurant Federations of India (FHRAI):

The Federation of Hotel & Restaurant Federations of India (FHRAI) is the apex body of the Indian Hospitality industry. Founded in 1955, the Federation has diligently built on its rich legacy and is today privileged to serve as the leading voice of our industry and plays a seminal role in supporting the growth trajectory of India’s hospitality and tourism sector. FHRAI provides a vibrant interface between the industry, government, regulatory bodies, academia, international organizations, civil society and the media.

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