Ordering food on Zomato gets expensive: Zomato raises platform fee by 25%

Zomato platform fee: Zomato, the food delivery platform, has recently implemented an increase in its platform fee, according to media reports. Effective from 20th April, the platform fee, which users are charged per order, has surged by 25 per cent, now standing at Rs 5 per order. The increase has been observed across several major cities including the National Capital Region, Bengaluru, Mumbai, Hyderabad, and Lucknow.

This adjustment follows a previous increase in platform fee from Rs 3 to Rs 4 per order, which was implemented on 1st January. The rival delivery service Swiggy, headquartered in Bengaluru, already charges a platform fee of Rs 5 per order.

Platform fee is distinct from delivery charges and is applicable even for users enrolled in Zomato Gold, the company's loyalty programme. Despite the waiver of delivery charges for Gold members, the platform fee remains applicable.

Zomato initiated the practice of charging a platform fee in August 2023, starting at Rs 2 per order, which was subsequently increased to Rs 3 in October, and then to Rs 4 in January, before reaching the current rate of Rs 5 in April.

In addition to its food delivery services, Zomato's quick-commerce platform Blinkit imposes a handling charge of Rs 2 on each order.

The implementation of platform fees coincided with a notable increase in Zomato's quarterly profits. In the October-December period, the company reported a profit of Rs 138 crore, a strong rise from the Rs 36 crore reported in the preceding quarter. This marked a turnaround from the Rs 347 crore loss incurred in the December quarter of the previous fiscal year.

Furthermore, Zomato's operating revenue for the third quarter of the fiscal year 2023-24 saw a robust year-on-year growth of 69 per cent, amounting to Rs 3,288 crore on a consolidated basis.

Intercity deliveries have been a focus area for Zomato's expansion efforts. However, the company faced legal challenges resulting in the suspension of its intercity delivery service, known as Legends. Launched in 2022, Legends initially facilitated food deliveries between select cities, which later evolved to include delivering pre-stocked items from other cities, aimed at reducing delivery times.

Following the initiation of intercity delivery services, Siddharth Jhawar, Zomato's head of intercity delivery, resigned from his position after three months. A lawsuit was filed against Zomato in a district court in 2024 by a resident of Delhi, alleging that pre-stocked items were being delivered from nearby warehouses, raising questions about the legality and operational practices of the intercity delivery service.