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The National Restaurant Association of India is set to hold discussions with food delivery platform Zomato after it sought to hike commission rates by 2-6 percent from restaurants.

Industry sources said that Zomato reached out to several restaurants in the past few days via mails and messages seeking to hike commission rates. Some restaurant owners claim they were told they could be delisted from the platform if they didn’t comply to the new commission rates, while some said mails were immediately followed by calls and messages from Zomato executives to respond to these mails agreeing to hiked rates.

CNBC-TV18 has seen some of the mails and messages that restaurants received.

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"As per your discussions with the Zomato account manager, you hereby agree and acknowledge, that with effect from 05/03/2023, your current 'commission' will be revised from 22 percent to 24 percent, and 'payment mechanism fee' will be revised from 1.84 percent to 1.84 percent for all your future orders being delivered through Zomato," an email to a restaurant read, adding that the contents of the mail would come into effect upon receipt of written confirmation.

Commission rates in the industry typically range from 14-25 percent depending on the average order value of the restaurant. A higher AOV attracts lower commission and vice versa. NRAI said that restaurants mostly with lower AOVs seem to have been reached out to revise commissions.

Swiggy typically has higher commission rates than Zomato and the restaurants claim Zomato executives are citing coming on par with other food delivery platforms as a reason behind hiking commissions.

Zomato, in a statement, said it keeps reconsidering commissions to make sure they are competitive and sustainable for restaurant partners as well as Zomato.

Restaurants have refused to comply with revised commission rates and say higher commission rates will greatly impact their business given food delivery already brings in wafer thin margins and higher commissions will mean restaurants lose money on delivery orders. At a time when restaurants are limping back to business after COVID-led disruptions, higher commissions will lead to further restaurants shutting down.

Zomato hiking commissions also comes at a time when the company highlighted a slowdown in its food delivery business post Diwali. "This trend has been seen across the country but more so in the top 8 cities," the company said at the time.

Also Read: Zomato launches 'Zomato Everyday' for home-style meals starting Rs 89

First Published:Feb 27, 2023 8:55 PM IST