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Zomato hikes platform fee to ₹4 across key cities after bumper NY Eve

Zomato hikes platform fee to ₹4 across key cities after bumper NY Eve
  • New Year's Eve saw Zomato temporarily increasing its platform fee as high as ₹9 per order in certain markets.
  • In August last year, Zomato introduced a ₹2 platform fee to improve its margins and become profitable.
  • Constant increase in delivery/platform fee may enable lower growth rates for order volume

Buoyed by record food orders on New Year's Eve, food delivery platform Zomato increased its mandatory platform fee to ₹4 from ₹3 per order across key markets.

The new rates were effective from January 1.

New Year's Eve saw Zomato temporarily increasing its platform fee as high as ₹9 per order in certain markets.

The company's shares opened high (hovering around ₹126 in morning) on Tuesday after international brokerage firm CLSA remained bullish on its stock.

In August last year, Zomato introduced a ₹2 platform fee to improve its margins and become profitable.

The company later increased the platform fee to ₹3 before raising it again on January 1 to ₹4. The new platform fee is levied on all customers, including Zomato Gold.

“This has been one of the ways of improving profitability for Zomato - apart from ad revenue, delivery charges and higher commission from restaurants - as margin levers. Zomato does about 85 - 90 crore orders annually - an increase in each Re 1 convenience fee will lead to a positive impact of ₹85-90 crore on EBITDA - which is around 5% positive impact on EBITDA,” says Karan Taurani, Senior Vice President-Research Analyst at Elara Capital.

However, he says that constant increase in delivery/platform fee may enable lower growth rates for order volume and one would need to monitor potential impact of this on order volume growth.

Zomato and its quick commerce platform Blinkit saw highest-ever orders and bookings on the New Year's Eve, compared to previous years.

"We have delivered almost as many orders on NYE 23 as we did on NYE 15, 16, 17, 18, 19, 20 combined. Excited about the future!" Zomato Founder and CEO Deepinder Goyal posted on X.

Albinder Dhindsa, CEO, Blinkit said they crossed the total number of orders they did on NYE 2022 in the evening only.

"We've already hit highest-ever orders in a day, OPM (orders per minute), soft drinks and tonic water sold in a day, chips sold in a day, tips given to riders in a day (thank you India)," Dhindsa informed.

Meanwhile, Zomato received notices from the tax authorities in Delhi and Karnataka over alleged short payment of goods and services tax (GST) amounting to ₹4.2 crore.

Zomato said it will appeal against the tax demand notices.

This came after Zomato received ₹400 crore show-cause notice from the goods and services tax authorities over unpaid dues collected as "delivery charges".

With inputs from IANS

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