Zomato approaches restaurants to hike commission charges by 2-6%: Report

Amid widening losses and a fall in profitability, Zomato has approached several restaurant chains seeking a rise of 2-6 per cent in commissions, a report by the Economic Times (ET) said. The restaurant operators have, however, refused to accept the hike. 

Anurag Katriar, the founder of Indigo Hospitality, which runs Indigo Deli and Neel restaurants, told ET, "Various restaurant chains have been approached in multiple cities including Mumbai, Delhi and Kolkata by Zomato to increase commissions. It is being done selectively, so far, and industry associations will be discussing this with the aggregator."

"This is happening for a week now. Some of us have been told we could be delisted, our delivery radius could be reduced, or visibility could be lowered on the platform if we don't adhere to their demand. We have not agreed," an executive at a national restaurant chain told ET.

For the past two years, Zomato has been charging 18-25 per cent commission per order for deliveries. Swiggy charges a higher commission and this is being seen as Zomato's attempt to be at par with it. However, experts believe that it would impact the food chains' unit economics. 

"It is good to see Zomato's focus on unit-level profitability, but this might disturb the unit economics of restaurants drastically," Karan Tanna, founder and chief executive of food tech company Ghost Kitchens told ET.

Experts added that a gradual increase in the commission might lead to an easier transition. 

In the quarter ending December 2022, Zomato reported a net loss of Rs 347 crore. It was Rs 63.2 crore higher than in the same quarter a year earlier. The company's CEO Deepinder Goyal said that the slowdown was due to "a few temporary factors".