Is Zomato's 25% Increase in Platform Fee for Customers Justified?

Zomato one of the popular food delivery companies, has increased the fee of delivery charges on its customers by 25% to ₹5 orders from 20th April 2024.

Image source The Economic Times

The platform fee increase is appropriate in selected cities such as the National Capital Region, Bangalore, Mumbai, Hyderabad, and Lucknow Zomato has last increased the platform fee on 1st January 2024 from ₹3 to ₹4.

Image source OnlyTech

Swiggy on the other side, is another food delivery company based in Bengaluru, that charges a platform fee of ₹5 per order. The platform fee is charged by food delivery apps, apart from the delivery charges.

Customers opting for the Zomato Gold Loyalty program do not need to pay for the delivery charges but still pay the platform fees.

Image source Times of India

Zomato started charging a platform fee of ₹2 per order in August 2024, which afterwards hiked to ₹3 in October and  ₹4 in January 2024. The company's quick-commerce platform, Blinkit charges a handling fee of ₹2 on every order. Following the introduction of the platform fee in August, Zomato's quarterly profits witnessed significant growth, with the firm reporting a profit of ₹138 crore for the October-December quarter of FY23.

Zomato launched its intercity delivery service. Legends, in 2022. which delivered food from selected restaurants in a few cities to other cities in 2023, the company made changes to the model and started delivering pre-stocked items from other cities in a shorter time.