The National Restaurant Association of India (NRAI) has raised concerns about the long-term implications of in-dining deep discount programs and mandatory aggregator payment platforms, warning that they threaten the financial sustainability and independence of restaurants. While these programs may appear attractive for boosting short-term footfall, their long-term effects include eroded profit margins, disrupted pricing structures, and diminished brand value.

Small and independent restaurants are particularly vulnerable. Unlike larger chains with substantial financial backing, smaller establishments struggle to sustain operations when offering aggressive discounts. These practices risk creating an environment where customers expect unsustainable deals, undervaluing the quality of the dining experience.

Additionally, the bundling of deep discount schemes with aggregator payment platforms exacerbates the issue. Restaurants are compelled to pay commissions as high as 4–8% per transaction, far exceeding the standard 1–1.5% charged by conventional payment gateways. This adds to the financial strain while giving aggregators increased control over customer relationships.

As customers gravitate toward aggregator-driven ecosystems, restaurants face the risk of losing direct engagement with their patrons. This compromises their autonomy and hinders the development of loyal, long-term customer bases.

The NRAI urges restaurants to critically assess such programs and adopt sustainable practices that prioritize quality and independence. Deep discounting may seem like a competitive necessity, but its hidden costs make it a double-edged sword. Restaurants must instead focus on creating unique dining experiences and fostering direct customer relationships to ensure their long-term success.

Insights for this article are inspired by the National Restaurant Association of India.

India’s Tier-II cities—such as Indore, Surat, Bhopal, and Jabalpur—are fast emerging as the next frontier for food and beverage (F&B) growth. With rapid urbanization, increasing disposable incomes, and evolving consumer tastes, these cities offer a fertile ground for the F&B industry’s expansion. Yet, the pace of development in these regions raises an intriguing question: Are we doing enough to tap into their immense potential?

A Market Ripe with Opportunity

While Tier-I cities like Mumbai, Delhi, and Bangalore have traditionally been the epicenters of F&B growth, Tier-II cities are no longer playing second fiddle. Rising aspirations and improved connectivity are transforming these cities into thriving urban centers. The middle-class demographic in these areas is keen to embrace organized dining experiences, making them fertile ground for national and global F&B brands.

However, the true appeal lies in the untapped nature of these markets. With less saturation compared to metros, F&B brands can establish a strong foothold and build loyalty early on. Lower operational costs in terms of real estate and labor further enhance the attractiveness of these regions.

Challenges on the Horizon

Despite their evident potential, the entry of big players into Tier-II markets has been cautious. The reasons are multifaceted—lack of robust infrastructure, limited consumer exposure to niche cuisines, and logistical hurdles. For instance, while cities like Indore and Lucknow have seen the entry of brands like Domino’s and McDonald’s, others like Raipur and Jabalpur remain underserved.

Additionally, the consumer base in Tier-II cities often seeks a delicate balance between affordability and quality. This requires F&B businesses to rework their offerings to suit local preferences without compromising on the brand’s value proposition.

The Path Ahead: Strategies for Success

To truly unlock the potential of Tier-II cities, the F&B industry must adopt a nuanced approach. Here are a few suggestions:

1. Localized Offerings: Understand the regional palate and customize menus to resonate with local tastes. For example, introducing vegetarian-friendly options or flavors rooted in local traditions can help brands connect with consumers.

2. Hybrid Formats: Instead of large standalone outlets, brands could experiment with smaller kiosks or cloud kitchens to reduce initial investment and operational costs.

3. Community Engagement: Building trust is essential in these markets. Hosting food festivals, collaborating with local influencers, or supporting community-driven initiatives can help brands establish a strong presence.

4. Digital-First Strategy: With growing internet penetration, digital platforms can play a crucial role in reaching Tier-II consumers. Brands should focus on targeted social media campaigns, online ordering, and app-based loyalty programs.

5. Infrastructure Partnerships: Collaborating with local governments to address logistical and infrastructural challenges could pave the way for smoother operations and long-term growth.

A Future Full of Flavor

India’s Tier-II cities are not just the next big thing—they are the now. As these cities continue to grow, so does their appetite for diverse and high-quality dining experiences. The F&B brands that can innovate, adapt, and connect with these evolving consumers will find themselves at the forefront of a new wave of growth.

At Hospitality News, we believe that embracing this shift is not just an opportunity—it’s a necessity. The road to success in Tier-II markets might be less traveled today, but it’s one that promises immense rewards for those bold enough to take the leap.

In the ever-evolving world of hospitality, a new trend is taking shape—one that transforms hotels from mere places to stay into immersive experiences, deeply rooted in the culture, history, and soul of a destination. Today’s travelers are looking for something beyond luxury; they seek authentic connections and memories that linger long after checkout.

Hotels are responding by reinventing themselves as storytellers. Rooms now go beyond decor, with designs inspired by local legends, traditional craftsmanship, and natural elements that offer a tangible sense of place. Guests may find themselves surrounded by reclaimed wood, locally sourced art, and carefully curated scents and sounds that transport them into the heart of the destination.

Exclusive experiences are becoming an essential part of these storytelling journeys. Guests might embark on guided culinary trails with local chefs, participate in historical reenactments, or join hands-on workshops with regional artisans. These thoughtfully crafted interactions provide an intimate glimpse into the traditions and crafts of the area, allowing travelers to connect directly with the local culture in meaningful ways.

One hotel embodying this trend is 1 Hotel Brooklyn Bridge in New York City. Designed with sustainability and local culture at its core, this hotel uses reclaimed wood, upcycled materials, and decor sourced from nearby Brooklyn artisans. Guests are welcomed with scents of native flora and calming soundscapes from the East River, creating a sensory experience that echoes the city’s natural beauty and urban energy. The hotel offers unique experiences, from rooftop yoga with breathtaking skyline views to curated city walks that explore Brooklyn’s history and ecology. A behind-the-scenes tour introduces guests to the hotel’s zero-waste initiatives, allowing them to see firsthand the commitment to sustainability.

This trend of experiential hospitality is making hotels destinations in themselves, seamlessly blending the art of hospitality with the culture of the locale. By crafting immersive experiences, these properties invite guests to step into a story, to engage with the essence of the place, and to leave with memories that are as rich and layered as the journey itself.