Swiggy was first to begin charging a platform fee of Rs 2 in April 2023. Zomato followed suit in August. Since then, the two rivals have been pushing up the fee, as customers seem willing to pay with no negative impact on order volumes.
The recent platform fee hike by online food aggregators Swiggy and Zomato has sent ripples across the restaurant industry. Initially raised by 20% from Rs. 5 to Rs. 6, many establishments fear that this increase will soon escalate to Rs. 10-15. As operational costs surge, these food delivery platforms are eyeing higher margins to sustain their businesses. Business Standard’s report echoes the concerns of numerous restaurants, advocating for reduced commissions imposed by the delivery giants. One restaurant owner expressed, ‘The platform fee is inevitably set to rise, aligning with global market trends.’
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Platform fees are similar to transaction costs on these apps, serving as a revenue stream for the companies. Every food order placed through Swiggy or Zomato incurs this additional charge, impacting both users and restaurants i.e. every time a person orders food from Zomato or Swiggy, platform fee is levied on the order. Inflated prices on delivery platforms, attributed to hefty commissions, make dining out more cost-effective than ordering in. This disparity in pricing has long been a bone of contention between restaurants and delivery services.
The move to hike platform fees comes as both the food delivery giants look to improve their unit economics more and give an overall boost to their revenues and profits. While delivery services offer convenience and accessibility, the financial burden on restaurants raises concerns about sustainability and profitability.
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About Swiggy, Zomato Platform fee
Swiggy was first to begin charging a platform fee of Rs 2 in April 2023, as reported by Moneycontrol. Zomato followed suit in August. Since then, the two rivals have been pushing up the fee, as customers seem willing to pay with no negative impact on order volumes. During peak times, Zomato even collected Rs 9 per order as the platform fee. Swiggy has also tested Rs 10 for certain customers in Bengaluru, Delhi, Hyderabad and other cities, as reported earlier.
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The hike comes despite Swiggy saying it has no plans to significantly increase the platform fee. They would keep pushing up the fee and stop when there is customer push back and an impact on order volumes, analysts had said earlier. For now, Swiggy and Zomato have restricted the platform fee to food delivery and haven’t extended it to their quick commerce businesses Instamart and Blinkit, respectively.
