Zomato shares surged early on Monday after the food delivery giant raised its platform fee by 25%, now charging ₹5 per order starting April 20.
What Happened: This increase affects major markets like the National Capital Region, Bengaluru, Mumbai, Hyderabad, and Lucknow. With Zomato processing 2.0-2.2 million orders daily, this increase could help boost the company’s quarterly earnings.
Previously, Zomato had upped the platform fee to ₹4 on January 1, following an earlier increase from ₹2 to ₹3. Zomato charges this fee in addition to delivery charges, which it waives for Zomato Gold members, although they still pay the platform fee while enjoying other benefits like discounts and free delivery.
Zomato’s rival, Swiggy, currently charges a similar platform fee of ₹5.
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The implementation of this fee, which began in August 2023, has been a part of Zomato’s strategy to improve earnings. Initially, this move was particularly critical as it helped offset a substantial GST demand of over ₹402 crore. Following these changes, Zomato reported a ₹138 crore profit for the quarter ending December, a significant improvement from a ₹347 crore loss in the same period the previous year, with its revenue growing 69% to ₹3,288 crore.
In addition to raising the platform fee yet again, Zomato has also suspended its intercity delivery service, Legends, due to low consumer traction and legal issues. The service initially delivered food from select restaurants across cities and was later adjusted to offer pre-stocked items for quicker delivery.
Price Action: Zomato shares were up 3.07% at ₹195.00 on Monday shortly after the bourses opened for trading,
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