Zomato shares zoom 5% after a Re 1 hike in platform fee; halts intercity deliveries

The company reported its third consecutive quarterly profit — Rs 138 crore — for the October-December period, compared with a Rs 36 crore profit in the September quarter and a Rs 347 crore loss in the three-month period ended December 2022.

Zomato's operating revenue for the December quarter, on a consolidated basis, grew 69% year-on-year to Rs 3,288 crore.

Zomato had last increased the platform fee for users on January 1 to Rs 4 from Rs 3. The company’s chief rival, Bengaluru-based Swiggy, charges a platform fee of Rs 5 on food-delivery orders.

The listed firm started levying this fee in August 2023. Initially, it was Rs 2 per order, and in October, the company increased the charge to Rs 3 in most of its major markets.

Zomato levies the platform fee in addition to a delivery charge, which is waived for customers of its Zomato Gold loyalty programme, who make an upfront payment and get benefits such as discounts and free delivery. The platform fee is applicable to Zomato Gold members as well.

Intercity deliveries

Zomato has suspended its intercity delivery service, Legends, as it looks to revamp its model. In its latest avatar, Legends did not see significant traction among consumers, people aware of the matter said. It also faced legal issues.

The service, which was launched in 2022, initially saw delivery of food happen from select restaurants in certain cities to a specific set of cities. Zomato tweaked the model last year to deliver pre-stocked items from other cities with a shorter delivery timeline.

“The initial model where food was delivered the next day … did not solve a problem for customers as it was initially imagined. The feedback received by the company was that it did not address immediate hunger pangs … which is why the model was reworked to pre-stock popular items,” as per reports by ET.

Barely three months after the intercity delivery service was launched, Zomato's head of intercity delivery, Siddharth Jhawar, resigned from the company.

Earlier this year, a New Delhi-resident filed a case against Zomato in a district court challenging the company's promise of delivery from renowned restaurants in other cities, when it was actually delivering pre-stocked items from nearby warehouses.

The matter is still in court.

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