NRAI Cautions Restaurants Against Aggregator Payment Platforms Threatening The Industry’s Future

The National Restaurant Association of India (NRAI), the apex body representing India’s restaurant industry, has issued a critical advisory, warning its members about the long-term risks of large-scale in-dining discount programs and aggregator payment platforms. While these initiatives may seem profitable initially, the NRAI highlighted their potential to disrupt the industry’s economic stability, threatening the autonomy and sustainability of restaurants.

The advisory comes after similar issues in the food delivery market, where aggressive discounting led to widespread financial struggles. The NRAI now warns that the dine-in segment could face the same fate if restaurant owners do not exercise caution when adopting these programs.

Sagar Daryani, president of the NRAI, highlighted the urgency of the situation, stating, “Deep discounting may seem attractive initially, but the long-term risks to restaurant autonomy and economic sustainability are severe, especially when coupled with mandatory use of aggregator payment gateways.” He urged industry stakeholders to critically evaluate these programs’ tangible benefits, engage in discussions with platform representatives, and make well-informed decisions.

The NRAI raised serious concerns about the financial burden placed on restaurants through aggregator payment gateways. These platforms often charge commissions ranging from 4-8 per cent per transaction, far exceeding the 1-1.5 per cent rates offered by standard payment services. Additionally, aggregators frequently lure customers with enticing discounts and cashback offers, costs that are frequently passed on to restaurants, further straining their profit margins.

Data dependency emerged as another pressing issue, with aggregators controlling vital customer and revenue data. Restaurants risk losing direct engagement with their patrons as customer relationships are absorbed into the aggregators’ ecosystems. This dependency compromises restaurants’ ability to manage their operations independently and weakens their competitive edge in a highly dynamic market.

The advisory also warned against a dangerous shift in consumer behavior driven by perpetual discounts. This trend could push restaurants into a cycle of unsustainable pricing models, forcing them to comply with ever-increasing commission rates and discount expectations to stay relevant. The NRAI emphasized that such practices could cause long-term damage similar to what has been seen in the food delivery sector.

NRAI urged restaurant owners to consider alternative, cost-effective payment systems to minimize their reliance on aggregators. Protecting customer relationships, maintaining control over valuable business data, and preserving operational independence are essential for ensuring long-term sustainability in the competitive restaurant industry. This cautionary advisory could shape how restaurants navigate the evolving dine-in landscape in the coming months.