Zomato Orders To Cost More (Image Source: iStockphoto)
On Monday, Zomato witnessed a commendable surge in its share value, marking a significant rise of over 2 per cent, with shares trading at Rs 193.05 at the time of filing.
The spike in shares can be attributed to the recent decision by the popular food delivery platform to hike its customer fees by 25 per cent. Consequently, the platform fee has been raised to Rs 5 per order, a move aimed at boosting the company’s revenue streams.
This adjustment in fees is applicable to key metropolitan areas such as DelhiNCR, Bengaluru, Mumbai, Hyderabad, and Lucknow. Zomato initially introduced the platform fee in August 2023 at Rs 2 per order, which was subsequently increased to Rs 3 in October. The most recent adjustment saw the fee rising to Rs 4 on January 1.
Notably, Zomato’s main rival, Swiggy, also charges a platform fee of Rs 5 on food delivery orders. However, reports suggest that Swiggy has been displaying a platform fee of Rs 10 to certain users.
The platform fee, a flat charge per order, is imposed by Zomato in addition to the delivery charge. While Zomato Gold loyalty program members enjoy waived delivery charges, they are still subject to the platform fee. The Zomato Gold loyalty program offers various benefits, including discounts and free delivery, through an upfront payment.
Zomato anticipates that this fee hike will contribute positively to its earnings. Given the substantial volume of daily orders, even a slight increase in per-order charges can significantly impact the company’s financial performance. This decision follows Zomato’s recent fee escalations from Rs 2 to Rs 3, and subsequently to Rs 4.
In another development, Zomato has put a pause on its intercity delivery service, Zomato Legends. Launched in 2022, the service initially promised next-day delivery of restaurant food from specific cities. However, it faced challenges in gaining traction and encountered legal issues due to a shift in its operational model towards pre-stocked items for faster delivery.
According to the BSE analytics, the shares of Zomato have given massive returns of 11.03 per cent in the last 1 month, 45.23 per cent in the last 3 months and bumper returns of 244.99 per cent in the last 1 year. The 52 week high and low of the share is Rs 199.70 and Rs 53.65 respectively.
