Zomato adds new charges for long-distance deliveries; restaurants unhappy

Popular food delivery app, Zomato has started charging a new “long distance service fee” for food orders that are delivered more than 4 km away.

 

According to a report by The Economic Times, the Gurugram-based company will now charge customers ₹15 for deliveries between 4 and 6 km if the order value is more than ₹150. For orders going beyond 6 km, the fee will be between ₹25 and ₹35, depending on the city. This fee applies no matter how much the customer spends.

 

According to the report, Zomato told its restaurant partners that total service fees, including this new distance charge, will not cross 30 per cent, not counting other costs. But some restaurants say that their total commission fees could actually go as high as 45 per cent.

 

“There are changes to the commission terms every few months and it is frustrating to do business this way without any clarity on commission structures. Several restaurants are in touch with each other to formally raise a complaint with Zomato over this and are contemplating going off the platform for a day in protest,” one restaurateur told The Economic Times.

                                                                                                                                       

  In addition to the new delivery fee, Zomato has also asked some restaurants to sign new agreements reflecting a name change of its parent company to “Eternal”. 

 

According to the report, Zomato insiders say the new fee is part of a bigger plan. The company recently started showing ratings based on how far food travels.

 

“This decision has to be seen in conjunction with the distance-based ratings system. Data shows that user experience deteriorates as delivery distance increases,” a Zomato executive told The Economic Times. 

 

That ratings system, which started last year, had already received criticism from some restaurant owners. Before Covid-19, free delivery was allowed within a 4–5 km range. After the pandemic, as many restaurants closed, that limit was extended to 15 km.

 

  The National Restaurants Association of India (NRAI) has contacted Zomato to share concerns. “A detailed discussion on the issue will happen later this week,” said an NRAI spokesperson.

 

Zomato’s changes come as the food delivery market is slowing down. Both Zomato and rival Swiggy have seen year-on-year growth fall below 20 per cent in the last two quarters.

 

Food delivery remains Zomato’s biggest business. It reported ₹9,778 crore in gross order value for the quarter ending in March — up 16 per cent from last year but slightly lower than the previous quarter. Zomato also recently shut down its 10-minute delivery services like Quick and Everyday.