Zomato hikes platform fee to ₹5 per order, pauses inter-city food delivery

Food delivery major Zomato has raised its platform fee by 25% to ₹5 per order and suspended its inter-city food delivery service, ‘Intercity Legends’. Back in August 2023, the company introduced a platform fee of ₹2 to improve its profit margins. This fee was subsequently raised to ₹3 in October and then to ₹4 before the latest increase on January 1. There was a temporary spike to ₹9 on December 31.

This price change impacts customers residing in major metropolitan areas such as Delhi-NCR, Bengaluru, Mumbai, Hyderabad, and Lucknow. The platform fee, an additional cost per order, is distinct from the delivery fee. Swiggy, Zomato's primary rival, currently imposes a platform fee of ₹5 on food orders.

Amid this development, shares of Zomato surged as much as 4.34% to hit an intraday high of ₹197.80 apiece on the BSE.

Notably, Zomato has put its Intercity Legends service on hold, citing ongoing enhancements. The Zomato app's 'Legends' tab informs users to stay tuned for updates as they work on resuming service soon. This service, initiated in 2022, guaranteed next-day food delivery from particular cities. However, it encountered challenges and legal issues due to a shift in its delivery approach, opting to utilise pre-stocked items instead.

In the December quarter, the food tech major reported a consolidated net profit of ₹138 crore against a loss of ₹367 crore in the year-ago period, driven by top line growth, and gross order value (GOV) growth across Zomato food delivery and Blinkit.

Zomato recently launched a service named the "large order fleet," aimed at managing substantial orders for gatherings, parties, and events. Deepinder Goyal, the CEO, made this announcement on X (formerly Twitter), highlighting that this fleet comprises electric vehicles.

Goyal stressed that this new fleet is specifically designed for gatherings hosting up to 50 people, filling a gap in their service offerings. He mentioned on the microblogging platform that these vehicles aim to address many challenges faced by customers when placing large orders on Zomato.

Discussing the rationale behind this initiative, Goyal mentioned that Zomato previously handled large orders through multiple delivery agents, resulting in less than satisfactory customer experiences. However, he acknowledged that this new feature is still in its early stages and described it as a "work in progress." He also stated that Zomato is actively working on incorporating additional features such as cooling compartments and hot boxes with temperature control.