NRAI Advises Caution Against Deep Discounting in the Hospitality Sector

The National Restaurant Association of India (NRAI), representing the country’s restaurant industry, has issued an advisory warning its members about the long-term economic risks associated with large-scale in-dining discount programs and aggregator payment platforms. While these schemes may offer short-term gains, they could disrupt India’s hospitality and retail dining ecosystem.  

The NRAI highlighted that deep discounting practices could pose serious challenges for the restaurant business by distorting pricing models and creating unrealistic customer expectations. This approach could particularly harm small, independent establishments lacking larger competitors' financial resilience.  

“Our industry is at a crossroads, and the decisions we make now will shape the future of dine-in operations. Deep discounting may appear appealing in the short term, but they also pose long-term risks to restaurants' independence and viability, especially when mandatorily bundled with the aggregator’s payment gateway,” said Sagar Daryani, NRAI President.  

The advisory pointed out that aggregator payment gateways charge commissions between 4 percent and 8 percent, far higher than the 1 percent to 1.5 percent charged by standard payment systems. Restaurants often bear the cost of customer discounts and cashback schemes, further impacting their margins.  

Data control and business autonomy were also flagged as critical concerns. Aggregators collect valuable customer and revenue data from restaurants without offering compensatory benefits, potentially weakening restaurants’ direct relationships with their patrons.  

The NRAI urged restaurant operators to critically evaluate aggregator payment system terms before participation. “As the voice of the industry, we are committed to protecting the interests of the restaurant community and ensuring a fair and sustainable ecosystem. NRAI encourages the members and the broader restaurant community to engage with industry colleagues, consult their platform representatives about these programs' tangible benefits, and exercise thoughtful caution and sound judgment before deciding to participate,” added Daryani.  

The association recommended that restaurants explore cost-effective, independent payment solutions while preserving control over customer engagement and data. This, it stated, would support long-term sustainability and autonomy in a rapidly evolving hospitality and retail market.