Food delivery platform Zomato has increased its platform fees from Rs 7 to Rs 10 in anticipation of the festive season. A notification on the app explained: “These fees help us pay our bills to keep Zomato running. To maintain services during the holiday season, they have increased slightly. »

In August 2023, Zomato introduced a platform fee of Rs 2 for the first time as part of its efforts to improve its profit margins. This fee was later increased to Rs 3 and then again to Rs 4 on January 1. The company also temporarily increased the fees to Rs 9 on December 31.

In FY2023, Zomato reported an order volume of 64.7 crore. An increase of Rs 1 in its pricing structure could result in an additional revenue of Rs 65 crore per annum.

On October 22, Zomato reported an increase in profits for the second quarter that fell short of expectations, mainly due to margin pressure from investments in expanding its “dark stores”, which are used to process online orders through its Blinkit fast commerce platform.

Platform fees are additional fees added to each food order on top of the goods and services tax, restaurant fees, and delivery fees.

For the quarter ending September 30, Zomato reported consolidated net profit that increased almost five-fold to Rs 176 crore.

Zomato has approved a fundraising initiative of up to Rs 8,500 crore through a qualified institutional placement to strengthen its cash reserves following its recent acquisition of movie and event ticketing businesses from a digital payments company .

Competition in the Indian online food and grocery delivery market is intensifying, with companies actively seeking funds to expand their operations and capture a greater market share. Zomato’s main competitor Swiggy recently offered shares worth $448 million in its IPO, while Zepto raised $340 million in August and is set to list its shares on the stock market next year, according to media reports.

In response to growing competition, Zomato added a record 152 new dark stores during the quarter, bringing its total to 791. However, Blinkit’s contribution margin, which measures revenue generated per each additional order as a percentage. of gross order value, fell to 3.8 percent from 4 percent in the previous quarter.

“New stores and warehouses require a few months to ramp up, which can temporarily dilute margins,” noted Akshant Goyal, Zomato’s chief financial officer.

Despite these challenges, Zomato’s revenue jumped nearly 69 per cent to around Rs 4,800 crore.

As of 12:30 am on October 23, Zomato shares were trading at Rs 258.70 apiece on the London Stock Exchange, reflecting an increase of 0.98 percent.

Also Read: Zomato Q2 Results: Profits grew 5x and revenue jumped 69% in FY25