Sodexo Coupons – Invalid. A Business Model explained

Short Summary: As of January 1st, 2012, all retail store chains in Bangalore (and across India) have stopped accepting Sodexo coupons in lieu of items purchased. Every firm hands out these Sodexo vouchers to its Employees (included in compensation package). Employees are now worried that these Sodexo coupons would be useless as they are not being accepted. My view is that this might just be a temporary phenomenon since there are a lot of stakeholders who will lose out if these vouchers prove invalid. The post explains the how and why of it.

If it were a school debate, the subject of the topic would be ‘Sodexo coupons – A boon or a curse. Discuss’.

Fortunately most of us are past that stage of life where we need to debate such issues in front of other school kids. Unfortunately though, unless we discuss and debate, we would lose money on a transaction like this. Let us look at the bare bone facts of the Sodexo business and try to draw some conclusions.

The perquisite valuation rule (Sodexo/Food coupon is a perk) (Fringe Benefit tax) governing the issuance of Food coupons states (Rule 3(7)(iii)) –

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.

If you didn’t have the patience to go through the rule, here’s what it states in summary. The Employer cannot pay more than Rs. 50/- per meal during working hours. Assuming a reasonable 2 meals per day and 22 working days in a month, it works out to Rs. 2200/- p.m food coupons (which is the limit that most of us get) (the max. anyone can get is Rs. 3000/-). Of course, since the Employer cannot pay more than Rs. 50/- per meal, the maximum value of any one Sodexho coupon cannot exceed Rs. 50/-. Hence the denominations are always Rs. 50/- or lower (usually they are Rs. 50/-, Rs. 35/-, Rs. 20/- and Rs. 10/-).

These coupons are useful for different parties in multiple ways. There are four parties involved in any food coupon transaction as illustrated below (along with Sodexo’s business model):


Employee: The Employee is usually very excited with any prospect that saves him a little tax. And so is the case with Sodexo coupons too, where availing the Sodexo coupon opportunity will make the food coupon amount tax free. For employees in the highest tax bracket (30%), this would save tax of Rs. 660/- p.m (or Rs. 7920/- per year). Of course, if you didn’t opt for the coupons, you would get Rs. 1540 as deposit in your bank account (Rs.2200/- after tax deduction). But did the food coupon craze take off in huge numbers just because an Employee could save some tax and buy food from his office canteen? Absolutely not. The reason it took off was because the retail chains (FoodWorld, Spencers, Foodbazaar, Big Bazaar, MK Retail, Total, Reliance etc.) started accepting the coupons for anything and everything that you purchase at their store. Employees jumped at the opportunity (and most people mentally classify these coupons as free money than hard cash – look at some stuff they buy using the coupons. They would never buy it with hard cash).

Company: Most companies started this perk out as a differentiator to employees (and marketed it as ‘it’s actually extra money in your pocket since it’s tax-free). And then all companies started offering it. From a nice-to-have feature, it has now turned into a must-have feature in the pay package. Companies don’t make or lose any money on this transaction (apart from the administrative headache).

Retail Store: Initially, the retail store used to accept Sodexo coupons only for pure food item purchases. It was a pure sales/marketing tactic from thereon – to attract more customers and to wean away customers from other competing chains, they started accepting Sodexo coupons for anything and sundry (which apart from increased sales, also increased customer loyalty). Eventually, competitive destruction happened and the retail chains till Dec 31st, 2011 accepted Sodexo coupons for all purchases. They redeemed their Sodexo coupons with Sodexo for a 5% discount (and they used to receive cash only after 20-30 days after submitting the coupon; credit card companies credit the retail store within 24 hours usually). It’s almost become mandatory for retail chains to accept Sodexo, else they risked losing customers to other retail chains and very fast (the cornershop marwariwala lost his business this way, till of course he also started accepting Sodexo!). Of course, to cover up the lost 5%, people usually concur on the fact that retail stores usually mark up the prices of certain items (although this cannot be corroborated with any data available).

Sodexo: Who exactly is Sodexo? This link gives more information (and this one in more juicier detail), but in summary, Sodexo is a French multinational corporation Sodexo is one of the largest food services and facilities management companies in the world, with 380,000 employees, representing 130 nationalities, present on 34,000 sites in 80 countries. They are the biggest beneficiary in this transaction. Since this is almost like a parallel currency, they have to invest a lot of money upfront to get the govt. machinery working in passing certain laws. They make money in three ways:

a) They receive Rs.100/- worth of coupons, while give back only Rs. 95/- in cash, netting a straight 5% gain.

b) Sodexo coupons usually come with an expiry date (think of it as a currency with expiry date *shudder*). Once its expired, no retail store would accept it and it becomes null and void. However, Sodexo had already received the money from your Company when they issued the coupon (and hence a 100% profit!). There is a complex process through which you can get new coupons issued, but most people would not have the time or the patience to go through the process for getting the new coupons.

c) The biggest of them all. They get money at 0% interest. Have a look at the diagram once again. Day 1, they receive Rs. 100/-. Day 24-34, they give back Rs. 95/-. That is, they have had the money for a full 20-30 days without paying any interest. In fact, till the coupon is used, it is practically free money (and they can lend this money at interest, thereby making money).

So, if this was a win-win-win-win arrangement for all the folks involved, why did the retail store chains suddenly stop taking Sodexo coupons in lieu of items?

There is no clarity on what exactly happened, but here are the news items floating around –

a) They have increased the brokerage from 5% to 9%. That is, the retail chains used to get back Rs. 95/- of their money, but in the revised scenario, would get back Rs. 91/-. Already under pressure for margins, this was not acceptable by retail chains. Presumably, they formed a clique and stopped taking the coupons across the table.

b) The number of days in which cash conversion happens has gone up from 20 days to close to 60 days, thereby impacting the cash cycle of organizations

thereby, resulting in a clique where the retail chains have closed ranks and have decided to put up a fight with Sodexo – to i) reduce the brokerage rate below 5% (and they’ll eventually settle to the original 5% figure) and ii) reduce the cash conversion cycle (and settle back on the 20-30 day figure).

Sodexo certainly has to negotiate and accede to the demands of the retail chains, simply because without them, Sodexo ceases to exist. Retail chains will also join the negotiating table because they will have too much to lose (the corner stone marwariwallah is still accepting Sodexos, and more probably, there is always a possibility that one retail chain breaks away from the clique to grab customers quickly). All in all, this is bound to be a temporary situation (max of 1-2 months), and as usual, the employee is being inconvenienced for the greater good of the mankind or some such.

My personal opinion is that the entire Sodexo tamasha is not worth the administrative hassle that most companies undergo (the big IT firms have everything automated, but all other firms are not). Why not give Rs. 2200/- as a food perk straightaway as cash instead of this circuitous food coupon route? Or tax it at the minimum rate? This whole hassle could have been avoided. But then again, there are vested interests at play here and I am not even a micro-bit player in the rational minority.  (As an aside, I always wondered about an active secondary market. For example, you get Rs. 2200/- worth of coupons and you save Rs. 600/- in tax. Which essentially means, you would be willing to sell the coupons for cash for anything above Rs. 1600/- thereby making a neat, tidy profit. I am almost sure this is illegal, but I just wonder!). Also, Sodexo coupons involve a lot of paper. They can shift to card based system (if at all this system has to exist) and save a lot of money (IT firms usually give out cards, but try using a card in any retail chain – nada for now!).

Disclosure: I don’t subscribe to Sodexo coupons. My wife does and hence have a vested interest liquidating the Sodexo vouchers :)

P.S: I can also see a govt. conspiracy here :) Sodexo coupons out of circulation means Employees will not subscribe to them January end (or future months). Which means, more taxable income and which means, more taxes. Government #FTW 😉

P.P.S: I explained a scenario above where a Employee can technically make a profit by selling the coupons at a discount. One enterprising person actually tried to sell these coupons at a premium on an internet site. Why would anyone pay hard cash (say, Rs. 105/-) in exchange for Sodexo coupons (worth Rs. 100/-). Beats me. Not too sure what the guy who posted this was thinking though :)

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thanks for the explanation.. really helpful!!

Impressive sodexo shit!

Very nicely put and explained…

Why would the retails stores accept sodexo coupons as they will get 5% less and that too money after 20 – 30 days ?

I agree with Sandy. Impressive sodex shit.

OMG !! Just now I collected 3000 rupees worth sudexo from my office….Can anyone tell me if Spencer or big baazar accepts it ..atleast for the food items

Your friend trying to sell coupons at a profit reminded me of this funny saying: any idiot can sell a dollar for 95 cents.

The whole tamasha is very emblematic of India, isn’t it?

@Mohammed, Sandy, Shilpi, Gold – Thanks!

@Doubt – As I explained in the post, two factors at play – competitive dynamics and increased prices.

@Satyajit – Not for now. Maybe in the future (unknown timeframe)

@Kartick – ha! And yes, it is emblematic. Too many parties get to make money at the cost of the Employee – too good an opportunity to pass up, I guess. Sad it is.

This is really great article dude… very well written and you’ve explained each aspect of this bullsh*t model….

Keep up the good work..


Precise and concise article….good job Kiran.

very informative and well written article kiran

Great post!! good explanation :)

Thankfully my company gives an option every month. I I do not collect those coupons this month they are automatically credited to my salary account in the next month (of course tax deduction happens, but govt. economy shud run. right?:-]).

Well said Kiran. I believe it would settle down in couple of months.

Easyday (Walmart), Bangalore is accepting Sodexo coupons till 14/01/12. Dump your coupons asap.

Possibly, Easyday stores in other cities too may be accepting Sodexo & TR coupons. Check out your local store.

Excellant write-up! Thankfully, the corner shopwallah still continues to accept the coupons. That brings another hotly debated topic into question — will or will not FDI in retail affect the local stores. The answer is NEVER! Our poor Indian mon-and-pop stores, by accepting sodexo coupons, credit cards, free home delivery, free credit etc. will never lose out to big retailers.

There is one more point involved if you look at specific people eating in the Mess.

The Mess people were accepting sodexo and ticket coupons from us.Since they used to get a 5% cut(which comes to 95)they used to use the same coupons at Reliance Fresh/Spencers etc to purchase vegetables/oil and such. There by they avoided a loss of 5% and were that way in a happy situation.

The moment the retail chains stopped accepting,the Mess walas also stopped since the coupons for them are a virtual 100% loss.(since they utilize a retail chain to purchase items.)

Giving back money after 60days is literally absurd.Dont know what sodexo has in mind.Starting some FD type account?

Also one seriously BIG Retail chain has also stopped on accepting Sodexo from 1st jan 12. Lets see how this goes forward.

The Only problem is, we will not come to know whether the problem will be solved or not.

Thank you ???? this was an eye opener

Ah! All my questions about Sodexo have finally been answered!


Best option is to avoid sodex. let pay tax to gov.

One way we can control our expense and that might help to control the inflation.

There is another clause that Sodexo can only be used to purchase freshly prepared or readily consumed food items and technically, they cannot be used to purchase raw food items in department stores.

Interesting read. You missed 3 points here.
1) Sodexo being in circulation: The kirana guy who happily accepts Sodexo for your purchase, uses these coupons in the Total and Star Bazaar where he gets stuff in wholesale.
2) Exchanging Sodexo for cash. This was very much prevalent. I doubt if it was Rs. 95, it was Rs. 95.5 I guess. Nevertheless, one could exchange Sodexo worth Rs.100 and get Rs.90 from shops. Shopkeepers have offered me this deal.
3) You missed another point – a shop joining this Sodexo network. Though it is not an issue for large chains, the normal bakery/kirana guy has to shell out 10,000 (not sure if it’s refundable or not) to join in.


very well explained, the last line of ur article sayng who’ll by Rs.100 coupon for Rs.105. It is a tax benefit of 5% for his buy, and this extra 5% margin(105-5=100) by the seller which actually a demand arising for tax savings. Retail stores’ll have loose little margin around 5-9% to survive in competition. Govt should crush this parallel economy things.

@Rohit, Umar, Deepa, AJ, Sriram – Thanks! Do share it with as many people as possible.

@Pankaj – That makes the two of us, although it still pains me why this tax deduction rule should come in at all?!

@Sandeep – Thanks for the headsup on Easyday. Will pass it on.

@Sunup – Yes, the corner kiranawallah is still accepting Sodexo. FDI in retail is too complicated a topic to be seen in the same light as Sodexo :)

@Anvay – Thanks for weighing in. I think no restaurants/mess accepts coupons now except the office canteens. Almost all big retail chains have stopped taking it, not just one.

@Neha, Minstrel – Thanks!

@Anil – :) Good intentions!

@gtoosphere – Technically, yes. But we all know that we use it to buy anything and everything in a retail store (and that’s because the Govt., Sodexo and Retail chains were in the loop and was profitable for all three parties).

@Nikhil – Thanks for weighing in.
a) Agree – kirana stores do use Sodexo to buy stuff from Sodexo. However, they were accepting Sodexo even yesterday (and Retail chains stopped taking it 5 days back). Wonder why? (and it’s not like they don’t know that retail chains stopped taking it).
b)The ‘exchange Rs.100 coupon for Rs.90’ sounds a good deal, although as I said in the post, not sure if its legal.
c) Didn’t know that. Good point! (although, if they are exchanging all Sodexo at retail chains, then there is no purpose for them to join the Sodexo network, no?)

@Srikanth – Didn’t understand the tax benefit-tax saving angle when you buy coupons for a premium. Could you explain? And Govt crushing things, you say? ha! That’s a good topic over beer :)

I still wonder why people claiming to be TAX-PAYER and hence good citizen subscribe to these sodexo coupons only to make general purchase. Isn’t it a corrupt practice? And for what!! Merely 600 Rs.
Think. Those earning good money (generally 50000+ per month) are ready to be corrupt for 600 Per month!! Why man Why!!!
Think about those Government BABUS. Why cant they be corrupt if they r offered crores?

Dear friends I am saying that If possible, stop taking sodexo and instead pay 600 rs tax. And deny those who claim that “Every body is corrupt” one less opportunity to make that absurd claim.

Any way, what would you say about ‘giving Bribe using SODEXO’ being legalised!!!!

Fantastic article you have captured all the facts well. Point is why an Indian company could not do it. Why not state bank of India.
… Shrikant

Nice explanation.

I totally agree with ‘why’ such coupons at the first place?

We all get Rs800 tax-free every month for transport allowance.
Same with House Rent Allowance also (with a formula)

Likewise, why not give a fixed or formula-based food-allowance tax free everymonth ?

People can walk to office & save that tax-free transport allowance (I did for 1year).

But every one _needs to_ eat, to survive. Why not give that food amount tax-free? Why should such mosquito companies exist and make money out of just printing parallel currency ?


A ‘well written’ article about Sodexho. But not really great. I would say this article is highly superficial and akin to the chat we have over come tea/coffee.

Not pithy enough expected from an MBA.

Before that a disclosure: I am in no way employed by any of the Meal Coupon/Voucher/pass companies mentioned in this article/comment nor related to anyone working in those. Like most of the Meal Voucher user, I am one mere user. I hate superficial analysis and hence this comment. Please take it in the right spirit.

In the author’s own words, as to “why did the retail store chains suddenly stop taking Sodexo coupons in lieu of items? There is no clarity on what exactly happened “. After writing a Mahabharatha type epic and finally missing the objective altogether.

There are some inherent flaws which I noticed.
1. He seems to have a gripe with Sodexho per se which is a FM company which generates more revenue from other activities than food coupons. While Edenred/Accor seems to have missed the bus.

2. He is also saying somewhere that they are “netting a straight 5% gain” out of Rs 100 txn with Rs 95 getting credited to the merchant. He seems to have missed out the Sodexho’s own overheads and the cost of operations.

3. “credit card companies credit the retail store within 24 hours usually”: Oh really? If you dont know how the CC operations are done, pls dont pass a judgment. The process of batching, clearing and funding takes quite a bit of time even more than a month sometimes.

4. “Sodexo coupons involve a lot of paper. They can shift to card based system”: The meal voucher companies (sodexho/accor) do issue cards. However, many companies prefer the old fashioned booklet way to reduce admin headaches.

5. “Once its expired, no retail store would accept it and it becomes null and void.” Any user can get the new coupons or the money back by writing to these agencies, within the stipulated time usually mentioned in the coupon itlself (usually overleaf) as there is a
Issuance and Operation of Pre-paid Payment Instruments in India (Reserve Bank) Directions, 2009 which governs these coupons.

6. Now the biggest misstatement/blunder of this article. “the max. anyone can get is Rs. 3000/-“. According to the rule: Rs.50 per meal maximum 2 meals per day if it is Free meals provided by the employee. If the same deducted from the employee salary means no limits for exemption. In most of the cases, employees pay for the coupons.Sodexo is given as per the employees wish. It is totally tax free. It can be of any denomination depending on employees use and his tax liability.

6. “govt. conspiracy here….. Which means, more taxable income and which means, more taxes.” What a bunch of codswallop. Do you know how many individuals are directly taxed in India? What percentage? 7% or 8%? And of those how many opt for Sodexo vouchers? And out of those who opt, how much tax can be collected? The govt can very well put a cess on the fuel rather than wasting time on bean counting and get more money And they do that v.v effectively.

Take my advice, Kiran. You write good English. But your bad research and poor footing defeats the purpose.

Next time, pls devote some time and do some research before coming out with any such articles. I can chip in with my inputs.

@Dhirendra – Why is saving tax legally considered corrupt? I mean, if there is Govt. provision (say, like 1 lakh saving in ELSS/PPF etc.) to save tax, it is very rational to use this avenue to save some money (even if it is Rs.600/- p.m). However, taking Sodexo (coupons) or not (ready cash after tax deduction) is purely a personal call.

@Shrikant – Thanks! I guess different firms have different competencies. As I stated in the blog, the concept of food coupons to save tax itself seems to me like a pretty useless concept. And I am sure SBI has enough headaches as is :)

@Ranganathan – Precisely my point. Needless exercise. But hey, quite a few people get to make money on the way. So, why not? Chalta hai attitude.

@Seethi – Thanks for your critique. I answer the questions you raised below –

‘Why did the…’ – Well, if the Mahabharata just stated ‘Kauravas got killed. Pandavas won. Story over’, it wouldn’t have taught us why, would it?. Similarly, if I had just explained that Sodexo demanded more commission than explaining the logic behind it first, it would be very incomplete.

1. I have no association with Sodexo/Edenred/Accor in any fashion. What I have stated for Sodexo works equally well for Edenred/Accor/any other firm. I stated Sodexo just because it is the most widely used voucher/coupon.

2. I did talk about costs very briefly (govt. machinery, operational etc). I did not in any way try to calculate the actual profit after all marketing, salary, administrative, IT and other expenses, nor was it my intent to calculate the exact profit percentage for Sodexo.

3. I work in the Banking field, and quite a bit on credit cards. The clearing, settlement and funding happens in max of 3 days (except for very few transactions – miniscule). Most happen in 24-48 hours.

4. True, Sodexo/Accor issue cards. My point was, did Sodexo/Accor supply card reading machines to retail chains where Sodexo vouchers are used to the maximum? Nope as of today.

5. I did mention ‘There is a complex process through which you can get new coupons issued…’ in the post. People usually won’t bother with the process (and the point was, why should they even have a expiry date on the coupons? – it’s not like they are perishable/machinery, right?)

6. You can’t claim more than Rs. 3000/- as per my knowledge and research. Do let me know instances where someone has claimed beyond Rs. 3000/- in Sodexo per month.

7. The govt. conspiracy line was written in jest was something that was clear to almost everybody (with all the smilies etc. and written in P.S). I thought it was pretty obvious.

Thanks for your detailed comment and critique Seethi. I would absolutely love to have your inputs and viewpoints in the future.


The article is really a good one. It tries to analyse the business side of the entire transaction as a whole. There are a few points that I want to add here.

1. The companies also pay a small commission to Sodexo for getting these coupons. (2%)

2. The cycle of 24-30 days is actually 60-70 days. Which means there is an interest free cycle of more than 2 months.

I would suggest another alternative than pay cash. Use the meal cards given by various banks. These are just prepaid cards and are only accepted in eating joints and grocery stores and hence cannot be used for any other purpose. There is no commission paid by the company and the retailer ppays some thing like 2.4% commission to the bank. The period of payment is only 24 hours and hence would be convinient option for the retailers.


Very valid suggestion to move to a card based system. Less paper, less fraud, less to carry, no change issues and quicker billing (they take atleast a minute to count the 2.5k stack)

A shop keeper has recently told me Sodhexo was asking for 8% which he can’t agree. He is ok with 5% though. Actually he is ok with 8% on some products but once he starts accepting Sodhexo he can’t impose that restriction. People will try to buy a packet curd using the coupon and he will start making heavy losses.

Also, a Sodhexo distributor from Bangalore told me they charge 3% to the company too. If this is true, they are making a whopping 12%.

And thanks for the awesome analysis.

@Santosh – Thanks!
1. Companies pay a commission to Sodexo? But why? Without the company/employees, Sodexo ceases to exist, no? If Sodexo is dependent on them, why should the company pay them? Could you hazard a logical guess here – I am stumped.
2. 60-70 days? Hmm. In my channel checks, they said 20-30 days. One of the reasons for retail chains to move out of Sodexo seems to be this credit elongation cycle too. Interesting.
3. Yes, meal cards does sound logical. Not too sure why we have not moved to that model yet.

Thanks for pitching in. New points discovered.

@Arun – Thanks.

Yes, card based system sounds wonderful till you realize Sodexo has not distributed card reader to retail chains (that makes you think whether they have an advantage in distributing only paper based coupons and actively not move to card based!).

Yep, the commission increase is one of the reasons why the retail chains have stopped accepting Sodexo.

You are the second guy telling me Sodexo charges companies too. Could you tell me why this is happening, given Sodexo exists because of companies/employees?

The Card based system is good. We can actually ask the Employers to credit the amount into our credit cards. We will then use it at any store. To be more specific, some can start a business and issue Food Cards that act like credit cards. Then no paper, no counting tickets, less administrative work etc.

Impressive shit here.. Always wanted to know the business model and how this work.. you have explained it precise and to the point.

that explains it … I am sure the retail chains will be accepting the Sodexo coupons around salary time this Jan.

I have verified with a friend of mine who also runs a store and is tied up with Sodexo. As per him, the affiliate commissions are around 3% and he is not aware of any increase being asked by Sodexo and payment cycle is also the same..

Nicely explained with logical proof cycle of every entities being involved in the transactions n benefits to whom. Accepted totally.As in this, Sodexo is only in Profit in every aspects. But lastly u twisted by supporting it by saying use cards instead of Paper> Why then Card if Invalid u mean it?

Interesting post with good insights.

– Yes, there are shop-owners / brokers who purchase your sodexo coupons at 5% to 7% margin (same as to what they are paying as commission to Sodexo)

– Axis bank started meal-card (debit card) but somehow that never took off!

– Retailers are paying only 2% or less for Credit card transactions while for Sodexo they need to pay 5% and that too with at least 1 month credit >> and that’s probably the key reason behind recent conflict.

– The most imp thing is “where the hell on earth one can get good meal for Rs. 50????” – except our parliament

– Why govt is allowing retailers to accept sodexo for non-food items – which is illegal practice.

Thanks 4 Explaination. Really this boycott shldnt last long

nice article and research work.

awesome analysis kiran – well thought out

this sodexo model works a bit like the credit card lifecycle doesn’t it?

@tusay – Thanks! Yes it does. In fact, it works better simply because there can be no defaults (no credit risk!) and company/employees are paying Sodexo to have a free float. Fantastic model, especially if you are adept at convincing govts., one way or the other that the country needs an alternative currency for food :)

Very nice article.

I never knew we could sell Sodexo at discount and still be profitable (tax benifit is higher than loss on selling coupons at discount)

Governments are the biggest shit in all this.. they almost tax us 60-70 % on our hard earned money.. first direct 30% income tax followed by series of tax on tax shit on what we buy, we pay almost 40-50% on what we buy.. Do we really get any government benefit for all that we have paid?? With Yuvrajs of dyanasties ruling us.. cant expect any better.. it will continue to remain a shithole.

I believe your friend tried to sell coupons worth Rs 2200, for say, Rs 1700 (so he makes Rs 100 overall considering he would have got 1600 net of tax had he opted for cash). So, in effect he was selling Rs 100 coupon for Rs 95, which is a fair proposition to both the buyer and the seller.

Or by ‘at a premium’, do you literally mean 100 coupon for Rs 105?

Very well written article Kiran. I like the way my non financial friends looked at it and said – would have been great if our professors at school put subject to text in this way!!

Great work!


I am actually not in India now and I was trying to figure out what is the noise there.

Very well explained. Good study.

Thank you for the complete information.

Must appreciate the Sodexo business model though!!!

well explained article on sodexo.
It is really beneficiable for the employees who even send their coupons to their families if they have excess ones. now everyone in dilemma.
anyways Great article.

Good Job. Well Written.
I was searching for the right answer.
Here it is…
Keep Writing!!

U do have sodexho cards which can be refilled… Debit card system.

Awesome post, Very well written. Thanks for the post

How come a foreign company like sodexho made easy money and dominated the show in a business which doesn’t need any sophisticated technology(this isn’t auto sector), they didn’t get stiff competition? It happens to be such an easy way to make money for a company, wasn’t this voucher business tried by local companies?(what rocket science does it take to print Rs.50 voucher on a piece of paper).

Dear Kiran,

Good stuff buddy, got a very good idea about SODEXHO and how it works. Well written, Thanks for the information.

Amazing and informative article.. Btw, I am discontinuing the sodexho as it is pretty useless from jan 1, will rejoin in case something good happens

If retail companies are reading this, I suggest they float their own coupon agency. Think of it!
1. Employers will be more comfortable since no chance of going invalid.
2. Employee will be more comfortable again for the same reason.
3. Retailers can just use the margin for over-head expenses and no point of cashing in since it is their money to start with!

A true story well written, very interesting. enjoyed reading :)Sodexho is in a big profit, didnt knew abt its business model. In our company we have received the below mail.
Sodexo would like to take an input from all the users on expanding their network and affiliate more outlets by introducing a initiative called “ MAKE A WISH CAMPAIGN”

Simply add your favourite outlets to Sodexo affiliate network , email them the attached “ affiliation request form” with your full name, organisation name, choice of outlet you wish to include at They have updated the All India Affiliate list ( zip file attached) and discontinued with some retail players which will not be part of Sodexo network from 1st January, 2012 for time being.

very analytical and anecdotal indeed :)
thanks Kiran

Starting Jan 2012, we received Sodexo smart cards and we are using it within office premises. May be the retail outlets stopped accepting it because of the cost incurred for these Sodexo smart card swipe machines??

Very good article. Retail industry did good job for not accepting the sodexho.It is the time to teach the lesson sodexho.

Nice read

Loved the discussion over here..I thought such discussions ceased to exist after twitter becoming popular in India.

MK Retail on C.M.H Road still accepts Sodexo. I bought some VIP Frenchie underwear yesterday and paid through coupons. :-)

I think govt / govt owned bank should provide sodexo type coupons.

Just replace “company” in your image (sodexho business model illustration) above with “govt” and there is an easy way for govt to get more taxes & more cash to play with

I meant replace “sodexho” with “govt” in the above image and the govt has more taxes & more cash

A really nice article.
However as per the govt rules, the sodexho are to be used only for food (and not raw food items) and non-alcoholic beverages.
This mean that any retail chain can always reject the coupons to be accepted for daal-chaawal-aata & there would be nothing wrong within govt realms. However, the exception to this is that they are not accepting it even if I were to buy a pack of biscuit or a bottle of cold drinks.
That is one of the reasons why the company cafes still continue to accept it and so does many ice cream parlours(eg. Baskin Robbins) and coffee shops(CCD,Barista etc.)

nice analysis.
it’s pretty obvious that who gets benefited by running sodexho (i mean we need a french company to print ruppee coupens!). Pity is IT people took last 5 years yet to understand it! and all these people support Anna!!
Sad! in india we still talk about corruption as money paid to a traffic police, the corporate-govt scams are huge and mammoth in proportion.

@Kiran – Very well written article. However, I’m actually a bit surprised that some of these stores are not accepting meal vouchers any more. I’ve been using my meal vouchers for a long time at these stores and they have always happily taken them.. Anyways, I’m quite ok with this because I will now use these vouchers at my neighborhood food outlet who gives me better service and I can even get the food items home delivered. Also, analyzing the business model of these companies you just stated, I am sure that these coupons ensure that a committed base of customers is directed to the retail shops since they have a relatively small network. It probably also brings in incremental business to them since for eg: whenever I shop at these outlets, I land up picking up much more than just the value of the vouchers. With this kind of a win-win model, I am of the opinion that this is just a temporary phase and these retailers will start accepting meal vouchers soon.

I ended up checking at my local outlet & even they confirmed that there is no additional charge or change in the terms & conditions. I get Ticket Restaurant vouchers from my office & apart from saving tax (as you rightly pointed out) they come quite handy in cafeterias, CCDs & other joints. Hope this issue resolves soon

Well explained, Great Job. Thank you.

I think the tax benefits to employees have been removed. So it was told by my firm and hence they are not supplying it. Is it not like the amount spend on coupons from salary gets added along with the 1 lakhs savings? or is it 1 lakhs + coupons bought?

You can always say no need of coupons and i will invest it in mutual fund or LIC or other investments.

Its good and bad too.

Why should we pay huge taxes to govt? All the IT guys are paying too many taxes as far as i know, so by paying that much what are we getting back, not even proper to roads to commute to office to home (vice versa), not even proper transport, not even power at home, end upp paying a single house loan through out ur life…. there are many things like this, some body commented 50000+ employees shouldn’t go for this sodexo as its corrupt, now a days in metro’s like b’lore living with a family n 2 children with income of 50000 is considered as poor (rent15000 for a decent 2 bed room, utility 3000, petrol& commuting for family 5000, school fees 10000 minimum, food 5000, health 2000), so ppl r only left with 10000 per month to save or invest.

Nice article, just some more comments from my side –

The Company pays FBT to the Government thus Govt earns even in case of Food Coupons being issued.

I doubt the whether the Companies would be paying Sudexo upfront. They would also be negotiating for some credit period. Thus they can nullify the effect of FBT to some extend.

30 days credit period is a norm in most of the industries spl FMCG.

Credit Card companies charge about 1% from the merchant as transaction fees.

And no one talked abt duplicate food coupons being circulated. Since these being just like legal currency there ought be huge duplicate food coupons being circulated which ended up to Sudexo. This can further be a reason why Sudexo may be charging higher commission.

Very useful information and nicely explained. I feel Govt. should take some innovative steps where tax they get increases and all tax payers not hesitate to pay tax than look for some small savings with Sodexo kind of option. Eating joint owner where Sodexo accepted get more revenue per month than a salaried person who eats in that joint. But salaried person pays more tax than eating joint owner. This is my guess. Hope I am right.

Points to ponder –
1. From the article above, it seems that retail chains are fleecing the employee by charging for Sodexo voucher acceptance.
Question: Are these retail chains paying from their own pockets for credit card charges, very high rentals, salaries, pilferage (very high on retail chains), jazzy lighting, air-conditioning, expansion plans,etc. Then when a cry for Sodexo charges. why to forget income-tax saving? I don’t think I am EXCITED about income-tax saving. The correct word could be ‘CONCERNED’.

2. I think there is a problem with a FEW retail chain stores ONLY who have stopped whereas 100s and 1000s of other places, sodexo vouchers are being accepted. I have used my vouchers at 2 retail chains between Jan 1st and Jan 4th. If there is a problem with sodexo then all the places it should not be accepted. I think there is some big problem with these retail chains and not with sodexo.

Question: Why only a few retail chains have stopped and not all the outlets in my city.

3. One of my friend is working in a cafe chain. As per him, Sodexo pays them in 15 days regularly. Sodexo has been defined above as a HUGHLY BIG MNC, then how can Sodexo defaults on payments.

Question: Why these retail chains are tolerating this so-called injustice of late payments and not sueing Sodexo if this point is valid at all. They were accepting vouchers for ages.

4. What do you mean by SODEXO TAMASHA? Is giving/taking sodexo a compulsion under our legal system.

Question: As per details above, it seems that the senior management of such large corporations is fool and is giving/forcing sodexo to their employees. Is it really so. In my company, it is optional to me and I have happily taken this to save my income-tax.

I am seeing sodexo in use for over 8-10 years now. A business model like this can’t survive for such long years.

Kiran, I am expecting research of business models of IT companies, Telecom companies, FMCG companies, etc.

Great Gyan.

Kiran, excellent write-up.

As Santosh said earlier, I believe their fourth revenue stream is their charges to the buying companies (I think this is dependent on the total number of coupons bought, their denominations, etc.): win-win everywhere for them!

Nice information..

After kolavari di this article is most shared/like on facebook.

thank god its an french company-oops not an Italyan one!!!

@Kiran, charging companies doesn’t make much sense. But they must have convinced companies because sodexo ‘looks’ lucrative to the employees and companies want to exploit that belief.

Anyways, Bangalore’s Sodexo distributor (who was my neighbour) told me they charge to the companies. I don’t see why it should be incorrect.

Really good article, Kiran. Very well explained

Great Explanation….! Thank You.

Nice analysis

My company hands out HDFC Food Card, which as you mentioned not accepted by all and sundry but most restaurants including Subway and retailers like Food Bazar, Reliance Fresh etc accept.

interesting article, thank you.
why din’t you mention anything about Sodexo counterfeiting? (its happening, impact, possible sub-cause for the knee-jerk reaction of the retailers)

Guys Guys…. Dont understand why we are cribbing about Sodexo… As I see it, all of us are actually benefited by it.. either as tax – savings or by selling it off and in some cases in premium as well.. By the way, why are the retailers giving you their sad stories :-).. and you concerned about their margins? have they told you how much price they take from vendors to run their show… Clueless??
Anyways, my average expenses in groceries are far beyond this amount of 2200/3000. Most of the times I spend my coupons on incidental purchases/restaurants etc. some times it is so handy that it has saved me from embarrasment when I had no cash and there was no swipe machine in the outlet. As if our life ends if sodexo is not accepted in the store. comeon guys, we can use it some place else. is spending 2000-3000 at alternative options so difficult.
@ Kiran – thanks for sharing the tax law, read it and found it interesting. But not sure how authentic is your case study… It sounds very biased as you have not taken any study of the same from Sodexo’s end.
@ Santosh and Arun – I dont see the word “Card” in the tax law. Is it really tax free?? if there is no tax benefit why should i go for a card system.. I can rather spend my credit/debit card instead.

Well written dude.

What a jerk and what a jerk article! I’m sure you are going to delete this post and not let it go live. But I want to let you know that people who are knee-deep-in-shit for 7K a year are BIG Time SUCKERS like yourself.

Boo hoo…
Pussy! How much is your monthly mobile bill? Internet bill? Restaurant bill? Petrol bill?
They why are you kicking dirt about such sundry things? Cheepo…

Excellently explained! Thanks


In sodexho chain all are losers except sodexho. And to me it looks like sodexho has bribed govt. to get this law going for so many years.

Why doesn’t govt abolish this law and simply give equal amount of tax benefit to all employees.

Employee will benefit since they will receive tax benefit without dealing with sodexho shit.

Employers will be happy since less administrative headache for them.

retails will be happier since they dont have to incur loss of 5% on sale.

govt will not accept this since they will lose their regular income in the form of bribe from sodexho.

sodexho will lose it’s business and cease to make huge profits.

In summary: amount of money lost by sodexho is equal to amount of money gained by other parties if at all this law is abolished.

blood suckers netas ae the real culprit.

Whatever Mr Kiran Dhanwada has written is correct only, and opinion is also correct.
I am not a big analyst on this tpoic but still i have some opinion about the use of sodexo.
the food items which we get from a super market or store in lieu of sodexo the same thing we can get from the nearest grossory shop at a lower price. and if you calculate the saving by purchasing from nearest grossory shop is nearly same as the tax payble if we are taking cash instead of sodexo.(example: ashirbad atta 10kg: retail price 260Rs and no discount at super market, but at local shop the price is 230Rs which is more than 10%)
only difference is in super market we get the things by ourself by seeing the items and in local shops we need to ask for the items to the shopkeper.
More over why to pay the benifit to sodexo instead the small local shop and the Govt of india

Very well written and explained. I was wondering why the move all of a sudden.. This explains it!!

Hey…. Kiran, very well written article. I always knew about how the entire thing worked but you have put it in words brilliantly.
I am gonna share this with all my friends and office colleagues.


Well explained I am also planning to move out of this shit in march…. I was searching on the net wat happened exactly… got the info…

I don’t take sodexo, even though my company offers those for tax benefit. for example, I used to buy one oil packet for 80 (MRP is 95). but same shop guy is asking 95 for the same packet if I pay using sodexo. not only that and I am limited to some shops with that sodexo. so I dont see much use with sodexo, so I stopped taking that I thought it is better to go for some other savings for tax purpose.

I am one of the sodexo Beneficiary and I think your article is not factual.

Pls look at some points:

My near hood local stores” confirm me that they get their payments every fortnight and sodexo deduct something 3.5% firm them

The reason for acceptance stop by all retail chain is not correct at all because one should under stand that if that was the reason then all of them can’t stop at the same time.

As a writer you seems to be more bias and not collected factual information as such in Super market business (grocery) has over all get 3-4 % Margin and no one will give 5% in grocery…

Not impressed with at all and you have misguided many people.

Thanks a lot Kiran, for all the analysis and I could understand how and why behind my experiences of using sodexo coupons,its business and current stand of “sodexo will not be accepted” at retail stores.

Very good explanation. I just took 3000 sodexo coupons to a reliance store for a mega monthly and they rejected it. Came to know about this shit move just now.

The bottom line is.. this is most beneficial to Sodexo, a middleman.

Can we do anything to impress upon the Government so that Government can directly exempt instead of depending on Sodexo. Afterall it is obvious that people spend more than the coupon money on food.

Hi Kiran,

A very nice post. I’ve been following your investment blog for some time now without knowing u have 2 blogs ? why 2 blogs ?

On Sodexo, most of the companies give the coupons yearly. isn’t it ? at least it was that way some 4 years when i last collected it.
If that is true, and the people spend it over the whole year… then imagine the kind of interest these fellows would be earning on their float. Investor’s dream company!!


Bulls Eye!!!

Information to very good detail. Appreciate your efforts from data collection to presentation. Very good eassy :)

My org never gave away Sodexho (Microsoft).

Even in the event I have received temporarily – there’s a wonderful fix called the HDFC Food Plus Card, which looks and works just like your normal VISA debit card: the only catch being it works only in hypermarkets, restaurants and the like.

Time to dump Sodexo… finally!

This is good explaination. I missed the dec 31st deadline for old and my sodexo money was waste paper ..this is my own problem ..but over all if I consider misplacing the coupans ..forgetting them over table etc does not make sense to use it …thanks again

Nicely written article!

Very nice article… really well explained.

Yes it is truth. For this 5%, increase in food price happening in shop. This will make other people in worry (buying by cash).

Thanks Kiran, I got atleast some insight from this article. Still need more time to digest it completely :)

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Great article. But at the end of the day, we cannot blame Sodexo for bringing in business.
1. Banks do the same in the name of Payback points.
2. Big shopping complexes give points to increase further shopping.
3. even Basics Life gives points to encourage further shopping.

This is just the way business happens. there is no bullsh*t about it, like one of the comments said.

As regards the Government, if it happens, it will increase their taxes by about a maximum of 300 for every person! which makes good money overall. (considering the number of IT employees India over).

Let’s just wait and watch how things go by from here. I am sure things will be reverted after a primary fear outlash.

Good article. Way to go!

Most of the retailers charge 5% extra from customers using sodexo.nowthat the percent is increased to 9%, its clear that customer won’t prefer paying extra jus to liquidate their vouchers.this is one of the reason for not accepting sodexo vouchers

Nice article. But it seems that the 5% commission info that you have provided is wrong considering the fact that here in Chennai most of the retailed were asking for Rs 4 discount per Rs 100 worth of Sodexo coupons while some even settled for Rs 3 per 100. For verification of this fact, you can refer to this article: Keep writing. Cheers

Hi everyone!

It’s indeed surprising and shocking to read the reviews on Sodexo vouchers. Every one of your ideas excites me but it would be great if you could take a minute out and look at the other side of the situation.

I would first like to take some time out and shed some light on the points covered under Sodexo heading on the main document.

1. The 5% gain highlighted here is actually not a gain ! There are lots of costs the organization is bearing which account for administrative costs, printing costs and logistics costs and a lot more. There are lots of organizations which don’t pay any delivery charges also to Sodexo which are actually a burden for the organization to bear. After deducting all of these costs, its some 2% odd margin that the company is getting in which it runs the entire show.

2. Talking about expiry date, the minimum span is 6 months (which I think is big enough for an employee to use vouchers worth 2200 Rs.) and the maximum is 18 months. I really don’t see this to be an earning for Sodexo as most of the employees across industries wait for the booklet each month and spend it in the same week itself.

3. Getting money at 0% interest!! I don’t know how many of you are aware, but the entire money Sodexo earns is controlled and regulated by RBI which is parked in an ESSCROW account hawk eyed by RBI. It is kept safely in RBI to ensure that affiliations and organizations are not in a soup.

I would now like to highlight the news floating in the market and give in appropriate answers to the same.

1. There has been no increase in the brokerage cost (as termed here) for the affiliated outlets. Its indeed the other way round. The large retail outlets are in turn asking Sodexo to reduce the service charge to an extent that it would become impossible for Sodexo to operate and sustainability will be a matter of concern for the organization.

Every organization has a cost to look into and work on some basic profit margins. For eg. If you are running a business for sales of bicycles, would you sell them at break-even cost ?? How do you expect Sodexo to do the same then? It’s the little cost left out which gives Sodexo a space to meet their expenses.

2. The cash cycle is on a calendar given to affiliates across India and its 15 days! The vouchers given are paper vouchers and they need to be counted by the organization and thereafter payments need to be made to the respective stores. I really don’t see this to be exceeding more than 25 days at the max.

3. Sodexo is running a “MAKE A WISH” campaign wherein you can put in a wish list of outlets which are in close vicinity of your residence so that you don’t have to reach out to stores far away. Rather than suggesting stores in your nearby area and making the picture brighter, each one of you, end customers has joined hands to start the large retail outlets again. Won’t you like to purchase everyday food items from a nearby store and not travel to distant malls/big stores?

It’s time that organizations wake up and look into the matter deeply and support Sodexo and not the retail outlets. Sodexo has been servicing various organizations seamlessly over the years and you as a consumer has been saving some 600 odd Rs of tax every month (assuming 30% tax bracket) over years and today, when the big retail outlets are making it tough for Sodexo to operate by squeezing into their margins, you have joined hands with them and not Sodexo!

Please review your thoughts and then take actions on the same.

Seems one of the important thing is missing here in the business model that shall be crucial to understand how and when sodexo gets money against the food coupons it has issued.
The myth is that sodexo gets the money whenever it disburse the food coupons to the corporates.
Actually this money goes to the escrow account held at Citibank under the guidelines provided by RBI. The process is bit more complex than expressed here. Not sure, how the profit sharing is done based on the corpus that is held at escrow account. It will probably require further research on the escrow account terms and conditions for such matters.

Here is the reference on this:-

The whole tamasha is NOT very emblematic of India. Companies like Sudexo and Ticket Coupon thrive very much in EU and US also. Americans are fond of Coupons and discounts contrary to the belief we have that only Indians seek for discounts.Americans love discounts and Europeans are fond of them. Its a global phenomenon to save money wherever possible.
Stores like Dominicks and Target give you straight away discounts if you subscribe to them even in first purchase.

Ms.Radhika ,

You have left out all the big retail outlets makes a large money on the products they sell which is on M.R.P where as if you go to a smaller outlet you get at a discounted rate.People don’t agree on that,yesterday I bought a litre of Oil for Rs.95 where as the same oil i have to pay Rs.135 why should I loss out so much even if i give Sodexo vouchers they accept it.People only think of buying at big super markets by paying a extra money for the same quality and same quantity of whatever they buy they are paying extra.They need to analyse that instead of talking about Sodexo or Ticket

Ms.Radhika ,

You have left out all the big retail outlets makes a large money on the products they sell which is on M.R.P where as if you go to a smaller outlet you get at a discounted rate.People don’t agree on that,yesterday I bought a litre of Oil for Rs.95 where as the same oil i have to pay Rs.135 why should I loss out so much.I give the Sodexo voucher to the smallest retailer he accepts it and he doesn’t over charge me.People only think of buying at big super markets by paying a extra money for the same quality and same quantity of whatever they buy they are paying extra.They need to analyze that instead of talking about Sodexo or Ticket.

I am concerned of my 30% TAX saving, which translate in to (600×12 = 7200/-) of my yearly savings which out forced investment, why will i be concerned of some one’s business, let’s not fool each other, do we ever think how much LIC or any other insurance company is earning from our investment ??? how many of us produce original Medical bills to our company and how many of us travel in LTA ???
Coming back to Retail mafias, why the hell they will pay 5% & do you really want us to believe that this biggges (kanjooos marvadies) of this world, who are choooso faying to our farmers will pay such amount, in all my knowledge of commerce and c’sence, they will be paying anything in the range of 2 to 3 %, so pls don’t share this shit of 5 to 9%.
Guys just go back in time, before 7 to 8 years, have you or any one of your family ever purchased your food stuff from Retail chains?? we also spend & purchase more or useless stuff in this chains & land up paying 2 to 3k more.
With or without retail chains, I will need food to survive; with or without these chains i will have my way out to save my TAX.
Friends, I just got above given email ID from Sodexo help line if anyone of you want to send your request to include your own choice of outlet then send your request on above email ID, i just did.. ?

The main reason the sodexo become popular is surely the reason that employee gain a tax benefit for the expenses he made on grocery. If not so, he stands to lose 30% of it.
I think the reason govt allowed such tax break was that employees food @ office are business expense and should be deducted from the income but then it got converted into such a big mess.

Would it not be simpler for the govt to give a tax break of Rs x/- towards such expenses the way they do for commutation allowances!!!!

Awsome workdone…there are people like you sir who deserve a seat in Parliament..such a waste ppl are governing us…all is politics here..But all in all you did an excellent work.

I hate the name – “sodexo”. Always sounded evil. So, does this mean that if the useless govt were to act on it and make the food perk tax free, people would stop using sodexo coupons and in turn stop the money going abroad ? If it is so, it should be done because the government is not really losing anything except perhaps if sodexo has to pay to the govt for its operations – over and under the table.

Wonderful insight buddy!

Good article, very well explained.

this is useless… every vendors are laying their own rules and regulations, own pricing etc… the vendors are making more money than the govt..scrap this (sodexho)..

Very useful info!

Really good article, please keep on updating such hidden truth to us. thank you …….

Very good explanation

Certainely a good article about Sodexho. Keep on posting!

Someone said scrap this sodexo system and pay additional tax of 600/- or whatever ….I would like to know from that gentleman what will u get in return of that additional tax …U still need some IAC like campaign to give sleepless nights to so called ‘elected’ MPs….Or in the other way u can say u have to find out the solution of your problem yourselves !!!

Dear Guys ,

Look in to Business standard from today Star Bazaar is started accepting the vouchers because they are concerned about there business its not because of sodexo or ticket they want customers to come in that’s all,you fools will still walk into the big outlets like someone said you will tend spend more unwanted things than food and pay on monthly basis,there are people without food starving out have you done anything for them. you guys are talking about something nonsense .

Very Informative and well explained.

I too want to add one more point, If u take the meals of 40 and if u pay 50, no change will be given back.. Even if u give 100 sudexo for 80 meals also u will get no change. check the terms and conditions back side. I still cannot understand what is the big amount it is saving interms of tax… So I had used sudexo for 6 months later turned to non-sudexo..:)

My 2 cents,
with the FDI in retail hanging by the wire, i doubt if there is any other twist to this story.
Imagine the big 4 retailers (Spencers, More, Reliance, Heritage) out it makes the entry for the MNC retailers easy.

What i saw this month is half of the crowd in my office stayed away from Sodexo, and went to their local Kirana shop.

I followed the suit & to my utter surprise i got a bill that was lesser than when i used to shop at a supermarket.

Tata tea gold (250 gms) MRP 85
Kirana shop – 81
Reliance – 85
Sugar 1 KG
Reliance – 35
Kirana Shop 32

the list is endless..

Very Informative..Kiran.
I would still opt for Sodexo coupon. As I can still redeem my coupons @ 5% rate from sodexo.

I am going to save 25 % (30-5%)on Rs. 26400 which comes to be 7260.

(Assuming Rs 2200 worth of coupons per month.)

Sorry calculation mistake. Its not Rs 7260, its

26400*.25= Rs 6600 worth of saving

I dont think they make interest on the transaction. They are supposed to keep the whole money in escrow account on day one and pay the retailers from their. I remember reading this on sodexho website. Correct me if I am wrong

I have coupons for Rs. 2000 valid till Dec 2012. Since big retail stores are not accepting, I need refund for these coupons from Sodexo. Can we get refund?? and what is the procedure.. please help.


Sodexho makes a good business model for someone in the food industry but then retailers by extending it across to every other item on the shelf have overall killed the spirit of the whole model. It made sense for the food industry as the food cost being lower higher volumes of purchasers will lead to higher spread of the fixed cost. Hence even if the wait is 20-25 days worthy of it. But with introduction in retailers where margins shrinking each day as the manufacturers do not pass on larger discounts, the retailers ended up digging their own grave.

Card can’t be used in replacement ..As gov’t has imposed a limit on card that if you spend more then 100RS a day then the amount above then 100 is not tax free…So if you are doing shopping with that and paid a bill of rs 1000 Rs the the rs 900(above 100 rs amount is not tax free. I have used both card as well as sudexo…many times the card even don’t work…So sudexo is most cofortable and convinient way to shop :)

Why these retail chains were accepting sodexo vouchers for so many years and changed our habit of shopping from our neighbourhood stores. Now when they have grown big owing to our walk-ins and our shopping at their stores, they are disrespecting me as consumers. They are in business because of lacs of users like me and now I am not important for them. Ridiculous. I have decided not to step-in any of these stores for life-time, even if they start accepting. I will be with somebody who welcomes me always. Not like them, who does off and on with me.

I hear that Star India has started accepting vouchers.

Very well explained…


Mr Kiran,

You may need to revisit your study / research / mindset as after Hydercity and Star Bazar, today Food World has also started accepting Sodexo vouchers. Others would also follow, let the better sense or at least some sense prevail in their mind.

Some may comeback, some may not comeback, some may go after this also but how can thye afford to refuse the CUSTOMER, the reason of their existance. If they have something with Sodexo, let them settle that with Sodexo. Why do you want to annoy / refuse / insult the CUSTOMER.

Jaago Grahak Jaago….

I am now expecting an article on Sodexo : A Valid Business Model.

As I know, Sodexo gives me income-tax benefit without any investment. Then why should I leave this. If few chains are not there, I will go to other stores.

How can they influence my income-tax saving.

Somebody who does not respect me, does not exist for me……

Thanks for your post.. It was very informative…

I too receive Sodexo & use them as a free money..

I really like the idea of making “Rs. 2200/- as a food perk straightaway as cash instead of this circuitous food coupon route Or tax it at the minimum rate”

Nice post…

the money one saves on buying things from a near khirana store by paying hard cash is far far more than this tax saving component. These retailers sell everything on MRP just because they accept sodexo coupons…

Excellent writeup man … nice explanation

I second with your opinion Prakash S.
As a consumer, even I would like to go to an outlet that welcomes me each time. While I too read on Business Standard about Star Bazaar having started to accept the Sodexo passes again. While, Future group honcho Kishore Biyani indicated a similar stance too last evening on ET Now. You may post your comments too after viewing the link

Another news taht Food world started accepting Sodexo. We guys can use there too.

I Liked it, with content and the time you spent on it and even reverting to everyone. Really good work.


Interesting debate…

Just wanted to express my views here.
Well,If there is a legal way to save income tax… I WILL TAKE IT..!!
we anyways do spend 2-3K p.m. on grocery/eating out… why not pay it via these vouchers, and save whatever little tax I can.!!

Also, if the big retail chains do not accept it… so be it!
Find a kirana store in ur locality and use ur vouchers there…(wont even have to stand in long queues at the Big Bazaar counters)

Great news guys..!!

Just heard that all oulets of Food World, Smart retail and Star Bazaars have started accepting Sodexo Vouchers again… looks like the others will follow soon. Afterall no one can afford to lose out on business in this highly competitive market.

hi guys,

quiet an interesting debate. however i guess we all are missing out on the most important fact, and that is the tax exemption enjoyed by these vouchers. i think we all are baffled by the large stores and have transformed ourselves tremendously. weren’t we buying groceries when these large stores were inexistent. we bought the same groceries then and we buy the same groceries now. the only difference is the shopping experience. as far as that goes i suggest we can compensate on that as long as we enjoy the tax benefits. we need to understand that our employers give us these vouchers to save us from the tax burden and not because the large stores accept sodexo vouchers. the most critical factor is that the tax exemption continues, the only way for not opting for sodexo would be, if the govt tomorrow cancels the exemption limit. infact i feel the its high time the govt realises the inflation rate, and raises the monthly sodexo limit too. and guys commom don’t drift the topic away, it seems your patriotism feelings have been sparked. how many of us are working for MNCs, i am myself working for an MNC, how many of us think that we should join an indian orgnization only. it all boils down to money, if an mnc offers you better growth opportunity and a better pay scale, tell me that you would still opt for an indian company for that ‘PATRIOTIC MAHATMA THAT YOU ARE’. wake up guys and smell the coffee, this is no point of discussion. am not an anti indian but how many of us drive a mahindra / or a HM ambassador or tata INDICA today. why don’t you buy these indian make cars, where is all that loyalty and patriotism gone (all GYAN).
we are in the global market and india is the fastest growing market for all industries. so lets cut the crap and concentrate on your core benefit, as long as you are not losing out its all fine.

Hi All,

I have worked with a voucher company earlier in the top management level. I agree with most of the inputs shared on this forum.

I currently head Camp Card Solutions (P) Ltd which provides smart card based meal cards to companies. Our product is based on law governing Meal allowance and our business model does away with most of the issues related to paper vouchers.

I DO NOT agree that the bank’s meal card is the way to go as per law governing meal allowance in India. Do write in to me or mail me your phone number @ We shall get in touch with you with details.

Warm regards,
Mani Shanker

doyou know you have gone viral in FB :)
well written.kudos.
if sodexo does issue a card, not many places they have swiping machine. I think, its just a matter of time before this will be resolved since everyone is gaining here…

Very well written , and do keep sharing!

Very well written and precisely explained.

Excellent article on a topic that was going through my mind sice I heard about this concept of parallel currency. Few points I understood from my interaction with the small retailer and restaruants
1. The percentage 5% to 8% charged by Sodexo depends on the volume produced by theseshops. If it is a small shop the percentage is higher and for retailer very lower closer to 3%.

2.In places where there are big retailers, small shops exchange it to buy the food products. Also consider places where there are no big retailers. One big player, accepts sodexho from all small players at a higher rate say 92 for a 100 and give it to Sodexo for 95. A practise I saw in Trivandrum

3. In your illustration Day 1 – Company pays 100 to Sodexo. I am not aware of this and I am not sure of its correctness. If so, isn’t it a big loss for the employer. Company pays the salary at end of the month but Sodexo at start of the month. For example, we get athe salary for January on 30/31st of January but we receive Sodexo on 1st of January. So Company actually looses out on the interest amount that it pays Sodexho. Employees receives that interest amount :). I would guess Companies pay Sodexo at end of the month as it is just another part of the salary amount for them. Your thoughts on this?

Gives a brief and helpful explanation about the recent Sodexho rumour. Nice work. Thumbs Up.

Good clean work dude … At last I have some clarity on Sodexo … 😉

just wanted to add my 2C about expiry date of the coupons.

The reason i think Sodexho has the expiry date is to prevent circumventing sodexho from the cycle.Imagine if the retailers start supplying sodexho’s to the companies\employees?

No wonder sodexho will re-imburse expired coupons directly to the people, they just want to prevent retailers from accepting them.

So expiry date is not really an income to Sodexho but a basic necessity without which this fake currency will cease to give them profit.

Hey Guys,

You could use your Sodexo passes at this shopping website

They deal in Groceries,Electronics,Kitchen & Utilities,Home appliances etc..

You could purchase and choose the payment mode ‘Sodexo on Delivery’

Try it !!

There are several wholesale merchants and not the big retail chains. You can get the whole house hold items cheaper here as compare to the big retail chain list. But the point is, these wholesalers will charge the extra 5-6% what they were paying to the Sodexo org. Still you can save the extras.


dont pay extra in the shops jus for the fact that they are accepting sodexo 😉

India based meal card system should compete with Sodexo to push them to act rationally. Indian banks like HDFC already started this. Good luck, Sodexo.

I have one basic question. Why only sodexo coupons are given tax benefits and why no other such schemes are not?

My compnay is providing Rs1100/- sodexho p/m. And there is a option if I won’t for sodexho then they will give cash of 1100.

I wanted to know how much tax i have to pay if I opt for cash?

I got Rs.2000 Sodaxo gift pass from my co. as one time gift. When I go to purchase one cell ph to Sodaxo enlisted store, they said 13.5% deduct from the actual pass value.
——-I think this is a good example how Sodaxo is a foolish it is !!

Income Tax Law permits prepaid meal vouchers only as tax-free. There is no mention of meal card in the law. So, if mealcard is used, it should be taxable.

If an outlet is asking for extra for taking Sodexo, then-
*That outlet is not authorised Sodexo outlet.
*If it is sodexo authorised outlet, then it can’t charge extra. Pl call on the branch no given on every meal voucher book.
* As per law, Meal Voucher is for eatable items only. Some outlets give other things also by charging extra.

Govt of India advertises ‘Jaago Grahak Jaago’. After that also, if somebody pays extra, it is foolishness. Every buyer has to wake up to his rights. Once, as outlet asked me to pay extra. I immidiately called on the sodexo branch no. Sodexo person spoke with the outlet owner. I did not pay anything extra. Let’s wake up….

Some comments above show that if there is some charge of 3-5% between Sodexo and the outlet. This 3-5% is bothering to most of the people. Has somebody thought about, how much is the retail chain outlets margin on products & commodities. These big retial chains buy directly from manufacturers and farmers. I believe the gross margin could be as high as 20-40% or even more. We consumer pay this to these retial chain. Yes, sometimes, this is offered to us as some odd discounts. Why somebody is not asking these retail chains to reduce such high margins that will give us much bigger savings. Sodexo margin is paltry against their gross margins.
Think about big brands of apparels, shoes, etc that these retail chains sell. A branded shirt will have a tag price of Rs 1000-1500. The same shirt will be available for Rs 300-350 without the brand logo, if you buy from the outsourced tailoring co. A big brand of shoe will have a tag price of Rs 2000-3000. The same shoe will be available for Rs 500 without the tag in Kanpur & Agra. These retail chains buy from such sources and we pay hugh margin to these retial chains.

These retail chain when buy directly from manufacturers, they would obviously negotiate for the margins of C&FA, distributor, stockists, retailers, large quantity discount, etc. This kills the local provision & grocery stores. Big margins are usurped by retail chains. After having such big margins also, these retails chains have thrown out the buyer, who is the sole reason of their existence.

After these retails chains have stopped sodexo acceptance, our local stores are still there to service us, many a times with lower prices. I would ask all the Sodexo users to use Sodexos at the local provision stores only. Retail chains are like videshi companies who are not for us. These retails chains have become big, just because of buyers like you and me and now they have got gutts to throw us out of their stores as we have sodexos. Tomorrow, they will throw us out for credit card also as credit card companies are also charging them.

We are buyer, payer and sole reason of these retail chains being in existence. Did they think of us anytime in all this nautanki. If these retail chains start accepting tomorrow, I would not go to them.

I will use my sodexos at Mc’Donals,Dominos,US Pizza, Barista, Cafe coffee Day, my neighborhood provision store who does free home-delivery on just a phone-call and would give me monthly billing also. Why should I go to these retail chains where I tend to over-spend, buy non-required things just b’coz of visibility, awkward schemes on out-dated products, etc.

We has the habit of buying from local grocery stores from ages till 5-6 years back when the retail chains came into existance. They changed our age-old habits. Now it has come to a full-circle and we should go back to our neighborhood provision stores who were serving us always and will serve us always.

Thanks Kiran to brings this in datails! I’m completly agree with you. I’ve opted the Sodehxo coupon in org, but never used it for loose Groseries, from were super market cover their 5% loss by increasing 15-20% costs like wheat, rice, all types of Dal, fruits, veg etc. I only purchased item who have MRP price(in packing) like biscuits, salts, jams, soaps, paste, creams etc.
If you purchase non-MRP items from supermarket, you lossed more money what you saves by opting Sodehxo/Meal coupon. Hence it wise to purchase only MRP, otherwise do not opt.

Kiran nice article. Someone had commented you to write after doing a research and he would chip in his inputs. Not sure why can he research on this topic.

Hi Kiran,
Very well written, must appreciate the efforts put researching on SODEXO hullabaloo.

Seems many ppl follow your blog, advice to you: try to capture PMO eyeball somehow before this year budget :)

Well said..
Hope to get this matter resolved else most of people will avoid accepting these coupons and it will be huge loss for Sodexo and TR.

Thanks alot Kiran, great article. There would be foxes in diguise of sheep, do don’t care. And whoever favours Sodexo means it is their interest for that company rather than people. Really I don’t care whether sodexo has operations cost or they are doing charity, some people favors them should join them and exchange my Sodexo to cash as well. And yes, I’d thank a lots to them for their charity work.
I don’t care either if Sodexo pays 95% / 110% or anthing to retails for the coupon amount submitted. Infact I believe sodexo should not charge reatailers anything as its using advancely paid money for more than 2 months. As an end user I should be able to get food in exchange of Sodexo anywhere and eveerywhere. Regarding paper usage, it is Sodexo to implement planting to make the balance, don’t you see most of corporates do CSR thing.

And again I’d like to thank Kiran for this great article.

@Kabi – First check the facts then comment. Sodexo business is controlled by RBI under Payment & Setlement Act 2009 and Sodexo has to deposit the moeny recd in RBI escrow account that is non-interst bearing. 2nd, Sodexo pays to retailes in 15-16 days cycle and not in 2 months. As Law only permits prepaid vouchers as of now hence paper is to be used for vouchers.
Hope you go out and use your vouchers at over 18000 outlets spread across 1300+ towns in the country.
Every business has to mind the operatiosn cost. I believe your orgn would also do the same.
Sodexo business operates in 3-4% gross margin whereas retail business operates in 20-25% gross margins, Eataries busines may operate in over 100% gross margins, Clothing business may have 50-100% gross margins, Software and BPO only God knows the % gross margins.
This article is based on wrong parameters and facts. Obviously, the crowd has gone the mob-way, blindly supporting the article without applying basic sensibilities and without checking the truth.

Thanks a lot Mr.Kiran,great artical.This “Sodexo” thesis is quite educative and very useful,It is like going thro a ENCYCLOPAEDIA”
Thanks for this artical.


The whole point of sodexho is pretty useless.
If it is not required by the Government to submit bills for food, for tax saving purposes, why not give it directly to the employees, the permitted amount, without deducting tax. Like Rs.800 for travel allowance.

The most irritating thing I faced were the following:
1. Every month, on 2 days notified by our company, we have to collect the coupon. That meant carrying a smart card on that day, which was swiped, and collect them. Often, I used to forget that and would collect 2 months of sodexho together. This meant money lying idle with Sodexho.
2. Even our office canteens stopped returning change if paid in Sodexho.
3. I was limiting myself from where to buy food, only to make use of the sodexho value. And I had to carry those bunch of cards, everytime I went out.
4. You cannot use sodexho in places where one can bargain, e.g. my roadside vegetable vendors. With cash, one can. Hence at times one is spending more to use the Sodexho.
5. The administrative headache for the companies are not required at all, if paid in cash.

In fact after facing these, I opted out of the food coupon.
Its high time companies stop providing these coupons, and just add the cash.

These companies not adhering to normal business practices and ethics should be thrown out of our country !

if wat to save tax opt for it or dont do. if you want to giv money to govt u can do…

Thanks for the info Abhinav. It’s great news indeed. Now I can use my sodexo vouchers for shopping at food world and s mart…

Foodworld has even put up the new signage that it accepts sodexo coupons. Seems that they have concluded the regional settlement.

Smart and foodworld join the race. They have started accepting sodexo

This is regarding someone trying to sell Coupons at higher price than the value of coupons.

A parent may wish to give pocket money in form of Sodexho rather than cash if (s)he feels that cash might be used for wrong purposes. So yes, there could be a potential buyer who may pay over and above the coupon value.

Sodexo is great financial instrument. Every month i take my entire compensation in the form of these great sodexo coupons…………………… I love them , I love using them…………….. & will boycott & ask other people also to boycott any attempt to invalid such a great coupon.I look some conspiracy behind non-acceptance of these great coupon.I hope some day some small country will adopt great Sodexo coupons as its national currency .That day will be a memorable for all the sodexo lovers !!! I appeal to all the retail (giant & start-ups ) to please accept these great coupons or bare the danger of losing loyal customer like us in the hands of your competitors…………Friends dont get afraid with such un-democratic act of retail chains…..Keep your fingers crossed , the day is coming when we can again use these great coupons to buy our stuff….”Customer is a king” but i think our retail players doesnot keep any relation with this quote…………Sodexo is very powerful n gives power to its bearer……….. waah sodexo waah………. Dil kush kar diita………Love u !!!!

Sab mazaak hai……. aur haan aise kuch nahi hai :-)

Bharti retail started accepting i believe

My company just told me that as per law “this is applicable only when the company has no food courts in the premises”. is this true? I have seen many companies who have food courts and still provide these food coupons.


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