Zomato Hikes Platform Fee To INR 5, Shares Jump 4%

Foodtech giant Zomato has hiked its platform fee by 25% to INR 5 per order and also suspended its intercity delivery service Intercity Legends.

Zomato has increased the platform fee across its key markets, including the National Capital Region, Bengaluru, Mumbai, Hyderabad and Lucknow.

On Monday (April 22), Zomato’s shares jumped over 4% in early trade to INR 197.8 apiece, compared to its previous close at INR 189.20. The shares opened at INR 193.00.

While Zomato handles between 2-2.2 Mn orders per day, as per reports, a mere INR 1 increase for a larger customer base could significantly boost the company’s earnings within a quarter.

Earlier at the beginning of the year, Zomato increased the platform fee to INR 4 per order across key markets from INR 3 on January 1.

Meanwhile, Zomato has also suspended its intercity delivery service, Intercity Legends. As the intercity section on the Zomato app read: “Closed now. We will be back soon”. It also added: “Enhancements are underway. Please stay tuned as we will be back to serve you soon.”

Initially launched in 2022, the service facilitated food delivery from specific restaurants in select cities to a limited set of urban areas. However, Zomato made adjustments to the model last year, enabling the delivery of pre-stocked items from different cities within a shorter delivery window.

With several experiments rolled out in 2023, Zomato started charging a platform fee on orders on its platform in August last year, starting with INR 2 and increasing to INR 3 across major markets.

Zomato’s closest rival Swiggy also started charging an INR 2 fee as well, which was later hiked to INR 3.

Both platforms are imposing a platform fee on top of the delivery charge, although this fee is waived for customers enrolled in their loyalty programmes. However, it’s worth noting that the platform fee still applies to members of Zomato Gold and Swiggy One.

As both the platforms are focussing on profitability, Zomato has seen a major turnaround in its profit since the last three quarters.

Zomato reported a consolidated profit after tax (PAT) of INR 138 Cr in the December quarter (Q3) of the financial year 2023-24 (FY24). The company’s operating revenue jumped to INR 3,288 Cr in Q3 FY24 from INR 2,848 Cr in Q2 FY24.

Recently, Zomato has also unveiled an all-electric ‘large order fleet’ to deliver large orders for up to 50 people in one go.

Zomato’s founder and CEO Deepinder Goyal said that the new vehicles would solve most of the problems of the customers who face problems while placing large orders.