It's worth noting that the platform fee was introduced in August 2023 at Rs 2 and has seen incremental increases since then.
The company has been focusing on improving profitability and adjusting to tax demands and penalties. To recall, Zomato has recently received a tax demand notice. The online food delivery platform has been issued a tax demand and penalty order of ₹11.82 crore. This is related to the Goods and Services Tax (GST) on export services provided to its subsidiaries outside India from July 2017 to March 2021. The order was passed by the Additional Commissioner, Central Goods and Services Tax, Gurugram.
Zomato believes they have a strong case on merits and will be filing an appeal against the order. The company had responded to the show cause notice with clarifications and supporting documents, which they feel were not appreciated by the authorities while passing the order.
Zomato has hiked its platform fee multiple times since its introduction.
- August 2023: Zomato introduced a flat platform fee of Rs 2.
- October 2023: The fee was increased to Rs 3.
- January 2024: Another hike brought the fee to Rs 4.
- April 2024: The most recent hike has taken the fee to Rs 5.
The decision by Zomato to increase its platform fee could be seen as a strategic move to address its financial challenges. While some may view this as a way to distribute the burden of losses among customers and partner restaurants, companies often argue that such measures are necessary to sustain and improve the services they offer.
It's important to note that businesses regularly reassess their pricing strategies to reflect changes in the market, operational costs, and regulatory environment. The introduction or increase of fees like Zomato's platform fee can be part of these adjustments. The company might also consider it a step towards achieving long-term profitability and ensuring the quality of service.
However, it's also essential for businesses to maintain a balance to ensure that the additional costs do not significantly impact customer loyalty or the viability of partner restaurants. The reaction of customers and partners to such changes can vary, and companies typically monitor these responses closely to make further strategic decisions.
In a conclusion, while the increase in platform fees can be seen as a way to offset losses, it's also a common business practice aimed at financial sustainability and service enhancement. The success of such a strategy depends on how well it is received by the stakeholders involved.
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