Zomato Shares Hit All-Time High After Hiking Platform Fees By 20%

Shares of Zomato hit an all-time high on Monday after the food delivery platform hiked its platform fee in some regions .

What Happened: Zomato and Swiggy jacked up their platform fees to ₹6 per order, marking a 20% increase from ₹5 earlier. The platform fee is applied over and above restaurant charges, goods and services tax, delivery fee and other similar charges. Every user, irrespective of their membership to the firms' loyalty programmes, is mandated to pay this fee.

The increased charges are currently being tested in key markets like Bengaluru and Delhi, The Economic Times said. In Bengaluru, Swiggy is also advertising a platform fee of ₹7, which is crossed out and reduced to ₹6 at checkout, the report added.

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In April 2023, Swiggy was the first to introduce a platform fee of ₹2 while Zomato followed suit by implementing a similar fee in August.

Platform fee determines the companies' earnings per order and is crucial to their profits. Both Zomato and Swiggy introduced these charges in a bid to improve their margins. Food delivery companies are aiming to generate an additional daily income of ₹1.25 crore to ₹1.5 crore by implementing a platform fee, as per some estimates.

Price Action: Shares of Zomato were up 1.89% at ₹226.68 on Monday morning.

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