Food delivery apps like Zomato and Swiggy have become a big part of our daily lives, especially in cities. They connect customers to restaurants and charge a fee for each order. Recently, there has been talk about these platforms increasing their commission and delivery charges. The main question is, will higher platform fees help them make more money, or will they create new challenges?
Stock Price Movement:
With a market capitalization of Rs. 313,877.65 crore, the shares of Eternal Limited were currently trading at Rs. 325.25 per equity share. Similarly, with a market capitalization of Rs. 106,503.66 crore, the shares of Swiggy Limited were currently trading at Rs. 427.10 per equity share.
What are Platform Fees and benefits?
Platform fees are extra charges added to each food order on delivery apps like Zomato and Swiggy. These fees are charged on top of the price of the food, delivery charges, and taxes. First introduced in 2023, initially at a low cost, these fees have been gradually increased over time as the companies aim to make their business more profitable.
Zomato and Swiggy, India’s leading food delivery platforms, have recently hiked their platform fees as demand surges during the festive season. Zomato has raised its fee from Rs. 10 to Rs. 12 per order (excluding GST), following last year’s festive season jump from Rs. 6 to Rs. 10.
Swiggy, on the other hand, has increased its platform fee to Rs. 15 per order (including GST) in select cities, marking its third revision within three weeks. Earlier, Swiggy had briefly raised the fee to Rs. 14 on Independence Day before reverting to Rs. 12, and last month it experimented with the same Rs. 14 fee at certain locations. This marks the steepest increase since April 2023, when Swiggy introduced the platform fee at just Rs. 2.
Impact on Revenue
Both Swiggy and Zomato are leveraging platform fee hikes to boost their revenues. For example, Swiggy, which processes over 20 lakh (2 million) orders daily, has raised its platform fee to Rs. 15 per order in select cities. This change alone could generate nearly Rs. 3 crore in additional income every day, adding up to hundreds of crores annually.
Zomato, on the other hand, has increased its platform fee to Rs. 12 per order. With a similar daily order volume, the company stands to earn around Rs. 24 crore each day purely from platform fees. Even a modest hike of Rs. 2 to Rs. 3 per order translates into crores in extra revenue, strengthening both companies’ financial positions significantly.
Why Are They Increasing Fees?
For Zomato and Swiggy, the challenge is balance. They need higher fees to move towards profitability, but they must avoid making the service too costly. A smart approach could be gradual fee hikes, better loyalty programs, or premium services for frequent customers. This way, they can improve margins without losing their customer base.
Effect on Customers and Business
However, higher charges may make food delivery more expensive for customers. Some people may reduce their ordering frequency or switch to eating out instead. If prices rise too much, it might slow down the overall growth of online food delivery. That means while price per order goes up, the total number of orders could drop if customers feel the pinch.
Financial Highlights
Eternal (Zomato) Limited’s revenue has increased from Rs. 4,206 crore in Q1 FY25 to Rs. 7,167 crore in Q1 FY26, which has grown by 70.40 percent. The net profit has decreased by 90.12 percent from Rs. 253 crore in Q1 FY25 to Rs. 25 crore in Q1 FY26.
Similarly, Eternal (Zomato) Limited’s revenue has increased from Rs. 3,222 crore in Q1 FY25 to Rs. 4,961 crore in Q1 FY26, which has grown by 45.59 percent. The net loss has increased from Rs. 611 crore in Q1 FY25 to Rs. 1,197 crore in Q1 FY26.
In conclusion, higher platform fees can help Zomato and Swiggy boost profitability, but the long-term success will depend on how carefully they manage customer expectations and restaurant partnerships.
Written By Nikhil Naik
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