Zomato Now Asking Restaurants To Bear Cost Of Cancellation, Increase Marketing Spends

Listed foodtech giant Zomato is reportedly asking restaurant partners to increase their marketing spends on advertisements and bear the cost of cancellations too that occur on the platform. 

According to a YourStory report, Zomato has asked a few restaurateurs to spend at least 5% of their revenue generated on its platform toward marketing advertisements to improve their visibility on the app.

However, as per the publication, Zomato has kept it optional for restaurant partners. 

Besides that, the foodtech unicorn has also asked restaurant partners to bring a uniform price structure across the online and offline platforms. For the same, it wants these restaurants to slash their food prices on its platform and match it with their offline charges.

It is here to note that, restaurateurs commonly keep their pricing high on Zomato to compensate for discounts and other charges imposed on them.

“No policy mandates marketing spends on our app for restaurant partners. We have policies in place for underperforming restaurants that require additional support ( for instance, the ones who mix up the most veg/non-veg orders, have recurring hygiene and quality issues, etc.) on the platform so that the minimum viable experience for customers stays intact. There’s nothing new behind this exercise,” Zomato spokesperson told Inc42.

The development has come when we reported about Zomato reaching out to restaurant chains seeking about a 6% increase in its commissions owing to rising losses and pressure to become profitable, just days back.

Notably, the foodtech aggregator also allows restaurateurs to advertise via videos and banner listings, known as cost-per-click (CPC) advertising method. The CPC method helps restaurant partners to get more visibility at the top of the search page on Zomato’s mobile app.

At the time of reporting, Zomato’s shares closed at INR 54.56 on Bombay Stock Exchange as on Thursday (March 2).

The latest development comes shortly after Zomato cofounder Deepinder Goyal announced that the foodtech giant could reach a size of $100 Bn in coming seven to eight years and also earn a profit of over $1 Bn.

“Internally, that is the goal that by 2030ish we should be about 100ish billion and the way we see the business growing and changing in terms of scale and profit I think we can easily be billion dollars plus in profit in seven-eight years’ time,” Goyal said.

Besides that, Zomato is also planning to enter other segments with Blinkit launching handyman services such as plumbing and AC repairing, among others on the platform in a few weeks.

According to its third quarter FY23 results, the food delivery arm reported an adjusted revenue of INR 1,565 Cr, down by 1% from INR 1,581 Cr in second quarter FY23. 

While, the count of its monthly transacting users plunged to 17.4 Mn in Q3 FY23 against 17.5 Mn in Q2 FY23.