Eatery owners are preparing to contest Zomato’s efforts to raise commissions after the food tech player tapped 50-60% of its restaurant partners for a 2-5% hike. The median take rates already hover in the 15-22% range, with some going as high as 25%.
Take rates have already climbed from about 5-10% over the past five years or so, the national restaurant association of India (NRAI) had said in October. That was especially worrying because Zomato and Swiggy together command about 95% of the food delivery business, they added.
Both new-age players have a commission rate that is unique to each of its restaurant partners. Broadly, commission rates between the two players have a room of 4-6%.
“This is Zomato
A score of restaurants have also been warned that they would be delisted, their delivery radius will be reduced, or the onboarding of new restaurants will be made more difficult if they fail to comply with the revised commission ask, the NRAI said.
“This is clearly an abuse of dominance on Zomato’s part and unfair trade practices which the NRAI vehemently opposes. We have had enough of talking, Zomato wants to get aggressive they should come and talk to us, we’ll be happy to talk this through,” said Sagar Daryani, CEO and co-founder of Wow! Momo Foods.
“If they call us partners, they should behave like partners. In fact, members have told us that these issues have increased ever since Mohit Gupta (former co-founder at Zomato) has left the company,” he said
The push towards an increased take rate comes at a time when both Zomato and Swiggy have acknowledged that the food delivery business has slowed over the past quarters. To better its margins and break even by Q2FY24, Zomato exited 225 markets in January where its performance over the past few quarters “was not very exciting” the company’s CFO Akshant Goyal said.
At the end of the December quarter, Zomato had 209,000 active restaurants listed on its platform, compared to 191,000 a year earlier. The total count stood at 207,000 in the July-September period.
A Zomato spokesperson said, “We keep reconsidering our commissions to make sure they are competitive and sustainable for restaurant partners as well as Zomato.”
During the December quarter, Zomato’s net loss widened to Rs 346.6 crore from Rs 250.8 crore in the preceding quarter. On a year-on-year basis, Zomato’s losses further went up compared with Rs 67.2 crore a year ago.