Indian Restaurateur — The Zomato Story
Zomato — Apparently, your best option to search for and discover great places to eat — Or is that so? Every foodie out there would definitely give great reviews and appreciate the work Zomato is doing, but I don’t think any restaurant owner would share that opinion. This is one of the very few articles that tells the darker side of the story from a restaurateur’s perspective.
Zomato now has two major divisions, Zomato Discovery and Zomato Delivery (for the purpose of this article). Zomato Discovery essentially deals with the listing, reviews and content management while Zomato Delivery deals with their online ordering platform and lately their managed delivery services as well.
Let us first discuss about the listings on the Zomato platform. Zomato does not need the Restaurateur’s approval or even give an intimation before listing the outlet in their platform. Their team constantly monitors outlets in other platforms or outlets opening up in the markets and adds them to the listing. The restaurateur can then go and claim this business listing as his/her own if he/she wishes to do so.
Now, Zomato claims that they are like the yellow pages for food outlets and that they can go ahead and list the outlets. This, I agree with. But they open reviews, menus and photos section for the outlet as well. While other business owners who have claimed the listing have an option to respond to reviews, report reviews, update menu, etc., the restaurateur who has not claimed his/her listing cannot do anything in this regard. This will affect his/her business for sure. So, in my personal opinion, this is forcing the restaurateur to claim his listing in Zomato in a way.
Giving an example, a successfully running cafe in Bangalore has been fighting a battle (over mails, not legal yet) with Zomato to remove his/her listing from Zomato for the past 6 months with no avail.
Any Foodie’s response to this would be, “Why not claim the listing? What is the problem with listing yourself on a portal?”. But I believe that the choice has to be with the restaurateur. If the government suddenly decides to list the database of citizens with contact info and enable reviews for each person, would everyone be fine with it? Wouldn’t it make atleast a segment of people uncomfortable? I think Zomato has to give this a thought and change their policies on this.
In India, more than 80% of the food outlets do not have a food license. Though a few months back Zomato did a drive to collect the food license information from many outlets on their online ordering platform, they did no action to publish the same or to shut down the outlets who do not have one (atleast from their online ordering). Post the fire tragedies in Mumbai, they have now started listing fire safety license status on the outlet listing pages. I guess they are waiting for some other media issue to happen before publishing the food license status on all listings. I believe that every foodie out there would like to know if the food they have ordered is coming from an outlet that has a food license. Given the fact that they have been boasting that they are a customer-centric establishment, this is a BIG miss from their end.
Reviews are the major aspect of the discovery for which any foodie frequents the Zomato platform. Let me first explain how their rating system works.
Every restaurant starts at a rating of 3 when the listing is created. Based on the reviews and online order ratings (if the outlet has any) the rating of the outlet moves up or down. For the first 2 months, there is a new tag for the outlet during which period the rating does not show. (One of the very few but good initiatives towards helping the restaurateur). After 2 months the rating (out of 5) starts showing against the outlet.
The level of the foodie writing the review has a major impact on how much it changes the restaurant’s rating. If this is your first review, it would have a very minimal impact on the outlet’s rating. But if you are a level 9 (Super Foodie) or level 12 (Connoisseur), the review and rating will have a major impact on the outlet’s rating. To put in layman’s term, to push a restaurant’s rating from let’s say 3.5 to 3.6, it will need 50–60 reviews from a level 1 or level 2 foodie. But the same push can be made by 2–3 reviews from a level 10 foodie. The difference is so stark that the outlets do not care so much about a review from a level 1 or level 2 foodie.
Given that a review from level 9 or above has a great impact on the outlet’s rating what stops a restaurateur from soliciting reviews from a Super Foodie or a Connoisseur? Apparently, Zomato has a neutrality team which checks this. Now they have added a tag above the reviews and calls them as “trusted reviews”. I think a response of ROFL would be warranted here. According to Zomato, soliciting a review means paying a reviewer for writing a positive review. What if I am paying a middle man? That is what almost every outlet is doing nowadays. There are bloggers or aggregators (brokers) who have a network of Zomato’s high-level reviewers and they charge anything ranging from Rs.300 to Rs.1500 for connecting you with a reviewer. The reviewer does not get any money but is given free food for the review. A friend of mine has five different Zomato profiles and all above Level 9. He/She has not paid for food in the last 2 months. He/She has in contact 5 brokers, who have requests from restaurants for reviews and asks the outlet to send free food (budget Rs.500 to Rs.1000) to my friend. In return, a review has to be written within the next 2 days with a rating of 4.5 or 5. But I guess Zomato does not believe that this is soliciting. All these fake / solicited reviews also show up in the segment of trusted reviews!
I think it is time Zomato agrees that they can never ensure that solicited reviews are removed from their platform. In my opinion, almost every outlet (assuming above 90%) who are rated above 4.0 in Zomato has solicited reviews for their outlet in someway or the other. I personally know atleast 30 restaurateurs who are getting inorganic reviews.
The thing for which most foodies frequent the platform (reviews) is the most broken system in place.
To be a part of the online ordering, the current commission rates charged by Zomato are 9% to 13% (not including delivery). If we are taking their online ordering and Delivery services as well, then the commission rates are between 19% and 25% based on the city and outlet.
The payment gateway charges (about 1.84%) is also passed on to the restaurant. So for all online paid orders, the restaurant bears this cost as well.
They generally do not change the minimum order value from Rs.99 and now they are coming up limitations on the delivery charge that can be levied as well. They do not have any option to offer discounts on a particular category or a limited part of the menu. All thumbs up for the foodie and almost all thumbs down for the restaurateur.
Now, let us talk about the “Zomato Exclusive” tag. Above 30% of the Zomato Exclusive restaurants are also available in other platforms. I guess that they are still not clear on the meaning of the word “Exclusive”. For their benefit, according to Oxford,
Restricted to the person, group, or area concerned.
‘the couple had exclusive possession of the flat’
‘the problem isn’t exclusive to Dublin’
(of an item or story) not published or broadcast elsewhere.
‘an exclusive interview’
(of a commodity) not obtainable elsewhere.
Zomato exclusive restaurants get almost a 50% waive off on the commission rates. And they get access to highlighters, carousels on the Zomato app for promoting their offers. The outlets that are Zomato Exclusive has ahigher preference in the listing logic.
All restaurants also have an option to do paid marketing for all restaurants in a “Cost per Click” model. The cost per click is different for each area and varies between Rs.25 to Rs.150. It does not matter if the person has ordered or visited after the click, but the click gets charged. They claim that click to order ratio is about 9% for top restaurants which is highly doubtful. In a well-matured market (USA) with very little competition, the click to order ratio is 3%. Considering it to be 3% here as well (would ideally be way lesser) the cost of customer acquisition is about Rs.750 to Rs.2000. Assuming even a 30% repeat rate and AOV of Rs.500, this is still a big loss to the restaurateur. Unless and until you are funded or can splurge money, this is a sure no-no for any restaurateur.
The listing logic for online ordering is a big black hole. No one really knows the backend logic (sales or marketing or strategy or even their product team). Apparently, the listing logic is their intellectual property and is guarded as an ultimate secret. Without knowing the levers and how much they affect the listing rank, the restaurateurs are completely helpless and confused as to what more needs to be done from their end.
After Runnr acquisition Zomato has been steadily growing their delivery fleet and are well on the way to become the biggest (or second biggest) delivery fleet for food delivery. Though Runnr has plans to foray or are already into medicine, laundry, grocery and other deliveries they contribute a very less percentage of their current delivery count (Mostly doing pilot runs in various areas).
Inspite of the slow and steady growth, the quality of the fleet on-ground is not on par with their competition (read as Swiggy majorly). Most riders are not aware of the localities and they do no show the sense of urgency compared to the competition. Came across a case where the rider picked up an order and then went out and was having Vada-Paav / Samosa from a nearby road shop without actually changing the order status to picked up. Essentially, the customer feels that the restaurant is delaying the order and his average delivery time is also not affected. These issues maybe present in other delivery fleets as well, but the rate of incidence is higher in Zomato now for sure.
The restaurants can right now opt for Zomato managed delivery or their own delivery or the hybrid model. The Zomato managed delivery model is right now not a good option, given the fact that the outlet is turned off from online ordering as and when there is no rider available in the area. And this is a common occurrence for now due to low size of the fleet in each locality and should definitely improve with time. Also, Zomato managed deliveries are not available for late night in almost all areas. Given these facts, most of the restaurants are now moving towards the hybrid model.
A few months back they started charging support calls to the restaurants at Rs.35.8 per call. If the order is not accepted within 2 minutes, the Zomato support team calls the outlet and asks to accept the order and BOOM, Rs.35.8 charged. The customer at the end of 40minutes delivery time presses order still not delivered button on the Zomato app, the support executive calls to enquire the status and BOOM, Rs.35.8 charged. A customer has given a location outside the delivery radius and the restaurant declines the order, BOOM, Rs.35.8. A lot more instances can be explained here. Though they have been rolling back the model that came along with these charges, most of the outlets are still paying the “Support Charges”. In a world where calls are free, though there might a time cost for the employee, I am just wondering from where they came up with this magic charge of exactly 35.8 per call?
Manager to team member — “Hey, give me a random number?” | Team member — “358” | Manager — “That’s really too high I guess? Let’s add a decimal and make it 35.8? Add that as the support charge per call in all contracts from today”
You will be charged payment gateway charges on actual (1.84% per order) and an additional charge (Rs 35.8) for every order that requires support from Zomato to either place an order or resolve user queries related order delays etc.
All these are my personal opinions shared by my fellow restaurateurs. The figures mentioned above are as close to the actual as possible and assumptions (if any) are mentioned. With so many articles telling the lighter side of Zomato, I felt that someone needs to voice out the other side of the story. Inspite of all these issues, I think Zomato is moving towards improvement and we will be able to see changes going forward.
If you suddenly see your favourite restaurant drop from a 4+ rating in Zomato to below 3, then Zomato might have figured out who I am! (Pun intended)
You can also go through my latest article on Swiggy by following This link.
PS : This is to everyone — I still see a majority of the population using the word “delivery boy” instead of “delivery executive”. I think each of us need to take the effort and make this change. They are the back bone of the food industry lately and making them feel respected is the very least all of us can do.
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