💬Why is this food entrepreneur disenchanted by Zomato?

With decades of family experience in the food industry, Manya Sehgal reveals Zomato’s red flags from a restauranter POV and new competitors in the food delivery space.

💬Why is this food entrepreneur disenchanted by Zomato?

Written by: Swasti Acharya

Zomato’s billboard collab with Blinkit featuring the iconic dialogue from Bollywood’s Maa Tujhe Salaam (dir. 2002) has created a new social media marketing trend in India.

According to Pepper Content, the company’s winning strategy is based on customer-centricity and relatable memes. But what’s happening to Zomato’s clients – F&B retailers – at the other end?

Manya Sehgal*, an ex-lawyer who’s now in the food industry, shares her first-hand experience with the IPO company as a client.

Get to know Manya:
- 36 years old
- Lawyer-turned-food entrepreneur
- Living in Mumbai

“My family's been in the restaurant industry for years so we've had several issues with them,” says Sehgal. “Their Gold program… it was absolute crap. It was just so full of shit.”

The shine’s off Zomato Gold

Or is it?

Zomato’s flagship loyalty program was first introduced in the UAE before reaching India in 2017. The beneficiaries of Zomato Gold would be able to avail 1+1 offers on food and drinks at select dine-in restaurants if they paid the subscription fee annually, half-yearly, or monthly.

Right before the pandemic in 2019, they launched their Infinity Dining programme and soon after had to discontinue it after facing backlash from restaurants.

“I'm guessing I'm one of the very few clients that actually reads every contract that they send across,” an ex-lawyer who reads the fine print, Manya can attest. “I feel like a lot of their policies, a lot of their terms and conditions are extremely unfair to restaurant owners.”

Even as it was marketed as a foodie-friendly scheme, customers were also curious about its business model: Who bears the cost of this offer? Is it borne by the company? Do restaurants face losses? Some others were interested in understanding programmes by competitors like Dineout and EasyDiner.

T&C unfair to restaurant owners

In the same year, National Restaurant Association of India (NRAI)’s #LogoutMovement gained momentum for exactly this reason – restaurant partners were losing out due to the heavily discounted prices offered to customers. Shiny on the surface, this Gold was hollow for partner restaurants and eateries.

“I brought that up in the past with them and we've had [unresolved] issues. I just think they're an ethically extremely questionable company ground up so it's just something that I found very intense, but I just like to avoid the platform altogether,” repeats Manya.

Later in 2020 they rebranded Zomato Gold to Zomato Pro with upgraded offers and exclusive delivery discounts. Last year, Zomato Pro was discontinued as new sign ups were halted and in quick succession, the Gurgaon based company reintroduced Zomato Gold in January 2023 in a fourth iteration of its rewards program.

As a response, NRAI is encouraging merchants to set up their own rewards programmes as a protection against the aggregator’s monopolising monetary benefits. Gastronomic stalwarts like Riyaaz Amlani, MD of Impressario Handmade Restaurants – the parent company behind Smoke House Deli, Social, and Salt Water Cafe – affirmed that Zomato’s policies must be advantageous for restaurant partners failing which, Gold will no longer be the standard.

Competition is Thrive-ing

Customers like Manya, who know what happens behind the scenes, have started opting for other delivery options.

“90% of the time we try to call the restaurant directly because for my family's been in the industry [so] I know how restaurants have to pay an added, like, commission when you order through aggregators.”

What happens if restaurants don’t have their own delivery service? Enter platform-based courier services offering same day delivery like Pidge, Borzo (prev. Wefast), and Thrive that provide an alternative to Zomato and Swiggy.

Manya says, “Thrive is very big now in Bombay. A lot of these high end restaurants or standalone restaurants that we generally order from are now on Thrive. It's kind of like a hybrid model where the restaurant does their own delivery.”

While Pidge and Borzo are industry agnostic logistics providers, Thrive positions itself as a 'restaurant-first' platform taking only 3% commission. Similar to DotPe’s 5%, newcomers are countering Zomato’s whopping 12% commission charged to restaurants.  

Zomato’s mistakes have paved the way for novices to thrive. Or perhaps, the real gold is yet to be mined.

*We anonymize participant names to protect their identities and encourage more honest dialogue.