Zomato hikes platform fee on food delivery to Rs 10 during festive season

Zomato has raised its platform fee for food delivery during the festive season from Rs 7 to Rs 10 per order as stated on the app of the Gurgaon-headquartered company.

A notification displayed on the app mentioned that this charge assists in covering our expenses to sustain the operation of Zomato. It has been marginally raised to ensure the continuity of services during peak festive periods.

Zomato implemented a platform fee in 2023 at a fixed rate of Rs 2 per order and has since raised it gradually. Swiggy, based in Bengaluru, was the pioneer in imposing this charge and has also elevated it to Rs 7 over time.

Platform fees are extra costs that are imposed on every food order, distinct from the expenses incurred at the restaurant, delivery fees, and taxes on goods and services.

Without a doubt, the platform fee incurs an additional 18% GST, which is not factored into the Rs 10 charge. Consequently, patrons of Zomato will be required to remit Rs 11.80 for each order as the platform fee, inclusive of taxes.

According to industry observers, these services process 2.0-2.5 million meal deliveries daily, and any rise in platform charges contributes to their earnings.

In response to an inquiry about the fee increase, a Zomato representative stated that these business calls are made based on various factors at different times,” said a spokesperson from Zomato. Zomato, under the leadership of Deepinder Goyal, announced a 68% year-on-year increase in operating revenue to Rs 4,799 crore during the September quarter earnings report released on Tuesday.

The primary factor behind the significant growth was the fast expansion of quick-commerce services, with the food-delivery sector – Zomato’s main revenue and profit generator – witnessing a 21% increase in gross order value to Rs 9,690 crore compared to the previous year.

By midday on Wednesday, Zomato’s shares were up 1.8% trading at Rs 260.80 on the BSE.

In the months spanning July to September, Zomato experienced a decrease in take rates from its food delivery operations, with a sequential decline of 20 basis points to 24.1%. This drop was mainly attributed to the quarter being seasonally subdued.

The take rate is the portion of revenue that a company generates from its gross merchandise value (GOV).

Industry analysts have indicated that the rise in platform fees imposed by food-delivery services is not expected to alter consumer behavior. Zomato disclosed in its fiscal 2024 annual report that it garnered Rs 83 crore from its platform over the year.