Exclusive: Zomato Puts 50:50 Refund Sharing With Restaurants On Hold

Weeks after launching a policy asking restaurant partners to share 50% of refund costs, foodtech major Zomato has now put the policy on hold.

Zomato rolled out the new policy over the past couple of months in phases. In the emails sent by the company to the restaurant partners, Zomato said that the restaurants and the company will contribute 50% each for the refunds provided to customers  

Inc42 has seen the email sent by the company to the restaurants.

“Unadressed concerns lead to gradual yet steady decline in customer retention, hurting both the restaurant’s and Zomato’s ability to drive demand. The cost of a lost customer is far greater than the cost of resolving a complaint,” Zomato said in the email. 

It further underlined that the new refund policy isn’t “just about cost sharing – it’s about reinforcing trust, ensuring fairness, and building a stronger, more sustainable food delivery ecosystem”.

However, the company halted the new policy a few weeks after its roll out. In a recent email, Zomato informed some of its restaurant partners that the programme will be relaunched after incorporating the feedback it received.

“We have temporarily paused the program and will relaunch after incorporating the feedback we have received from partners,” the email sent by Zomato and seen by Inc42 said.

Zomato’s parent Eternal didn’t respond to Inc42’s queries on the developments till the time of publishing this story. 

Restaurants Oppose The Policy

Several restaurant owners told Inc42 that the new policy is an attempt by Zomato to “cut its costs”.

“If the food gets cold when the delivery partner arrives at the location because of traffic or because the delivery executive took a longer route, why should the restaurant pay for that? That’s their fault,” a cloud kitchen owner, who didn’t want to be named, said. 

Another restaurateur said that Zomato seems to be making it mandatory for restaurants to bear the cost of refunds to trim its expenses even though it was optional previously.

The owner explained that earlier the restaurant partners were provided an option to either choose or reject a claim after Zomato initiated a refund. Zomato bore the entire cost if the restaurant rejected the claim. However, with the introduction of the new policy, the restaurant partners wouldn’t have any say. 

It is pertinent to note that Zomato usually initiates refunds for “high-value, power” customers, which are users with high order value and low complaints about their orders.

Eternal’s Slowing Food Delivery Growth & Regulatory Troubles 

The development comes at a time when Eternal’s food delivery business has been seeing a slowdown in growth. Eternal’s consolidated profit after tax (PAT) plunged 77.8% to INR 39 Cr in Q4 FY25 from INR 175 Cr in the year-ago period, due to rise in quick commerce costs and sluggish growth in food delivery.

Zomato’s adjusted EBITDA stood at INR 428 Cr in the March quarter, up 56% year-on-year (YoY) and 2% sequentially. Adjusted revenue rose 17% YoY and down 0.2% quarter-on-quarter (QoQ) to INR 2,409 Cr.  

Besides, Zomato delisted 19,000 restaurants in Q4 and said it would shut its Quick and Everyday services.

Eternal CEO Deepinder Goyal admitted in the company’s shareholders’ letter that the food delivery growth remains below expectations.

The new policy also comes at a time when Zomato is already engaged in a tussle with restaurants. Earlier this year, restaurant body National Restaurant Association of India (NRAI) said it was mulling to take legal action against Zomato and Swiggy over their quick food delivery apps Bistro and Snacc, respectively. 

Back then, Goyal, in a letter to Zomato’s restaurant partners, said that the company would never compete with them. 

Notably, Zomato and its rival Swiggy are already under the scanner of the Competition Commission of India (CCI). It was reported last year that the fairtrade regulator found the two companies in violation of the competition laws.