25% hike in Zomato platform fees, inter-city food delivery service suspended

Food delivery platform Zomato has hiked its platform fee by 25% to Rs 5 and has also suspended its inter-city food delivery service called Intercity Legends. However, this hike is effective only in some cities.

This comes weeks before Zomato is expected to release its March quarter financial results.

Zomato platform fee hiked

Zomato introduced the platform fee of Rs 2 for the first time in August 2023, as it was looking to boost its margins and become profitable. Subsequently it hiked the fees further to Rs 3 and then to Rs 4 on January 1. On December 31, it temporarily hiked the fees to Rs 9.

Moneycontrol quoted analysts and said that the platform fee hike would partially offset the impact of GST on delivery charges as the company's share price reacted positively to the development in January.

An increase of Rs 1 in the platform fee across all geographies could lead to a positive impact of Rs 85-90 crore on EBITDA as Zomato caters about 85-90 crore orders annually. This will be 5% increase on EBITDA.

Intercity Legends service

Zomato has also suspended its Intercity Legends service that delivered orders from top restaurants in major cities to customers in other cities. The Intercity tab in Zomato app says, "Enhancements are underway. Please stay tuned as we will be back to serve you soon".

Zomato's stock prices have seen an upward trend due to its rising profitability in its core business and the fast growth of its quick commerce arm, Blinkit. In the December quarter, Zomato's food delivery business reported a 30% on-year increase in adjusted revenue, reaching Rs 2,025 crore on a consolidated basis. Blinkit doubled its revenue to Rs 644 crore during the period.

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