The restaurant chains, largely in the casual dining space, raised concerns over their aggregator’s table-booking app, alleging it offers heavy discounts and cashbacks on in-restaurant dining. This move, they said, hurts the restaurant business, which was battered for over a year by the pandemic and is now dealing with rising food inflation.

Several restaurants Mint spoke to said they have not enlisted on Zomato’s dine-out program, called Zomato Pay.

In May, SoftBank-backed Swiggy acquired Times Internet-owned table booking platform Dineout in a deal which was said to be valued at around $150 million. These 900 restaurants include Mamagoto-parent Azure Hospitality, Wow! Momo, Impresario Entertainment & Hospitality Pvt. Ltd-owned Social and Smoke House Deli and The Beer Cafe. The companies said they logged out this month, protesting the steep discounts. A majority of these businesses are members of the National Restaurant Association of India (NRAI).

“We do not understand what problem the company is looking to solve for anymore. There must be a purpose for giving discounts. Customers are aware of our restaurants anyway and enjoy the dining out experience Once they have finished, they start looking for deals on these platforms to get discounts,” said Riyaaz Amlani, CEO of L Catterton Asia-backed Impresario.

The move comes a month after NRAI cautioned its partner members against programmes being offered by Swiggy and Zomato that offer promotions on dining out.

In a notification issued in September, the restaurant body said the offers impact the overall restaurant ecosystem in the long run. “Both Zomato and Swiggy have built a payment gateway—Zomato Pay and Swiggy Dineout—which incentivises our customers to use their payment gateways by discounting, offering 100% cash backs and bank offers and urge partner restaurants to adopt this payment gateway under the unsubstantiated promise of more footfalls,” NRAI said then.

In response to queries sent by Mint, a Swiggy spokesperson said Swiggy Dineout works with about 15,000 restaurant partners in about 20 cities and engages with them to improve its offering and make this partnership viable for everyone.

“Restaurant partners on the platform have complete liberty to decide on how much discount they wish to offer to customers through their listing on the app. Thousands of partners continue to join us each month and list on Swiggy Dineout, and only a handful of restaurant partners have expressed their desire to delist from the platform (No penalty for delisting). We continue to engage with restaurant partners and NRAI representatives to revisit their choices.”

Amlani added that the company also did not log into its competitor, Zomato Pay’s product that allows customers to seek discounts on dining out. “This is not a restaurant friendly practice. Swiggy’s delivery business has plateaued and now they’re trying to find new ways to eat into the dining out business,” he said.

But not all companies are unhappy with the programme. The marketing manager of a hotel chain said the company gets about 150 covers a month using the table booking app at a nominal fee.

varuni.k@livemint.com