India’s leading online food delivery platform, Zomato, has approached several restaurant chains seeking a hike of 2-6% in commissions amid widening losses and a fall in profitability. According to a report by the Economic Times, Zomato has been charging 18-25% commission per order for deliveries for the past two years. However, the restaurant operators have refused to accept the hike.

Zomato’s move to seek an increase in commissions comes as Swiggy, its major competitor, charges a higher commission. The online food aggregator aims to be at par with Swiggy, but experts are concerned that such a move could impact the food chains’ unit economics. Karan Tanna, founder and CEO of food tech company Ghost Kitchens, said, “It is good to see Zomato’s focus on unit-level profitability, but this might disturb the unit economics of restaurants drastically.”

While some restaurant chains have been selectively approached in Mumbai, Delhi, and Kolkata, others have been threatened with delisting, reduced delivery radius, or lower visibility on the platform if they do not adhere to Zomato’s demand. However, industry associations are set to discuss the matter with the aggregator.

Zomato reported a net loss of Rs 347 crore in the quarter ending December 2022, Rs 63.2 crore higher than in the same quarter a year earlier. The company’s CEO, Deepinder Goyal, attributed the slowdown to “a few temporary factors.”

The commission hike could have significant implications for Zomato, its partner restaurants, and customers. It remains to be seen how the situation will play out, and whether Zomato will be able to offset its losses through higher commissions.

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