Food delivery platforms Zomato and Swiggy have announced a 20% increase in their platform fees, leading to higher costs for consumers. This marks the third hike in less than a year, with the fee now standing at ₹6 per order.
Initially introduced at ₹2 per order in 2023, the platform fee was subsequently raised to ₹3 and then to ₹5 in April 2024. The latest increase to ₹6 represents a threefold jump in just one year.
It's important to note that this platform fee is an additional charge separate from other costs such as GST, delivery charges, and restaurant markups. Customers are obligated to pay this fee regardless of any membership programs like Swiggy One or Zomato Gold.
While the individual impact of a ₹1 increase might seem minimal, the combined effect on millions of daily orders translates into a substantial revenue boost for Zomato and Swiggy. The companies aim to generate between ₹1.25 to ₹1.5 crore daily from platform fees alone.
This latest hike is currently being implemented in select cities like Delhi and Bengaluru, with a phased rollout expected across other major urban centers.
The fee hike has drawn criticism from customers who have taken to social media platforms to express their dissatisfaction. Many are considering ordering directly from restaurants to avoid the increased costs.
Interestingly, Zomato's share price surged by 3% following the announcement, extending a six-month upward trend that has propelled CEO Deepinder Goyal to billionaire status.
The escalating costs associated with food delivery platforms are a growing concern for consumers. Coupled with the often higher prices charged by restaurants on these platforms due to commissions, customers are facing a double whammy.
The profitability of food delivery platforms and their impact on the restaurant industry are complex issues that will continue to shape the dynamics of the food delivery market.
The recent decision by Zomato and Swiggy to increase their platform fees has ignited a debate about rising food delivery costs. With this third hike in less than a year, consumers are facing a significant increase in their overall food delivery expenses.
While these platforms are justified in seeking profitability, the impact on consumers cannot be ignored. The growing disparity between restaurant prices and food delivery app prices is likely to push customers towards direct ordering, potentially reshaping the dynamics of the food delivery industry.
The future of food delivery in India will depend on how these platforms balance their financial needs with customer satisfaction. As competition intensifies, consumers will have more options to choose from, and platforms will need to innovate to retain their customer base.
Ultimately, the onus will be on the industry to ensure transparency, fair pricing, and exceptional service to maintain consumer trust.