Zomato's Fee Hike: Will it Boost Earnings or Push Customers Away?

Tech News. Indian multinational restaurant aggregator and food delivery company, Zomato has recently increased its platform fee for users by 25%. This means users will now pay Rs 5 per order as a platform fee. Initially introduced in August 2023 at Rs 2 per order, the fee was later raised to Rs 3 and then to Rs 4 in October last year.

The fee hike applies to major cities like Delhi-NCR, Bengaluru, Mumbai, Hyderabad, and Lucknow. The move aims to enhance Zomato's revenue streams amidst increasing operational costs and market competition.

Comparison with Swiggy

Swiggy, Zomato's main competitor, also charges a platform fee of Rs 5 per food-delivery order. However, some users have reported seeing a platform fee of Rs 10 on their orders, indicating potential variations in pricing strategies.

What is platform fee?

The platform fee is a fixed charge imposed on all orders, separate from the delivery fee. It's applicable to both regular users and Zomato Gold members, who enjoy benefits like discounts and free delivery through the loyalty program.

Zomato hopes that the fee increase will contribute to its earnings, especially considering the high volume of daily orders. Even a slight increment in per-order charges can significantly impact the company's financial performance.

Ongoing challenges

Despite Zomato's efforts, the intercity delivery service has encountered setbacks, including the resignation of its head and customer lawsuits. These challenges highlight the complexities of innovating in the competitive food delivery market.

Changes to Zomato legends

In addition to the platform fee hike, Zomato is making adjustments to its intercity delivery service, Legends. Launched in 2022, Legends initially promised next-day delivery of restaurant food from specific cities but faced challenges due to a shift in its operational model.

Zomato is reevaluating the Legends service to address previous issues and optimize its offerings. Plans for longer-distance deliveries within cities and international options are currently on hold as the company works on refining its service model.